Oman has become the fourth Gulf Cooperation Council (GCC) state to start charging value-added tax (VAT).
A 5% tax rate was introduced on April 16, exactly 180 days after the move was first announced by the Oman government.
The tax will apply to most goods and services although there are numerous exemptions including financial services.
According to Oman’s Tax Authority chairman, Saud Nassir al Shukaili, the tax should raise around OMR400 million (US$1.04 bilion), equivalent to around 1.5% of GDP.
Oman’s action means that Qatar and Kuwait are now the only GCC states not to charge the tax. All six member states signed the Common VAT Agreement back in June 2016.
Both the UAE and Saudi Arabia launched their VAT regimes on January 1, 2018 while Bahrain followed suit a year later.
A VAT regime is expected to be introduced in Qatar at some point in 2021 with a rate of 5% applied to most goods and services but also with the exemption of financial services.
Meanwhile Kuwait is likely to be the last GCC state to implement the tax with a 2020 International Monetary Fund report stating that it expects VAT to be introduced some time in 2022.
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