Ministry of Finance said various financial measures, including spending control, have had a positive impact
Oman’s Ministry of Finance has said there are no plans to postpone the implementation of value added tax (VAT) in the country.
Oman agreed to introduce VAT in 2018, as part of the GCC Unified Agreement, although it later delayed its implementation to 2019.
Citing a bond prospectus, Reuters reported that Oman “expected VAT to be implemented in 2021”.
The Sultanate’s Ministry of Finance, however, issued a statement to Oman News Agency - under a headline of ‘No plans to postpone VAT’ – and said it planned to introduce the new tax in accordance with its GCC agreement.
“The Ministry of Finance affirmed that it is going to apply the value added tax (VAT) in compliance with the GCC unified agreement to apply this tax at the level of the GCC countries,” said the statement said.
The ministry said the government is working on completing the legislative procedures to issue the VAT law, and that the Secretariat General of Taxation is currently completing the administrative, technical and technological equipment in preparation for applying this tax once it is approved.
Addressing concerns about the current state of Oman’s finances, the ministry said various financial measures, including spending control, have had a positive impact.
“The Sultanate will continue taking a number of financial procedures in aspects related to revenue and public expenditure in a bid to achieve fiscal balance of public finance,” a statement said.
“The financial accounts of the Sultanate indicate that the financial measures taken have achieved positive results in controlling government spending and reducing the annual deficit in return for an increase in government revenues.”
Last month, the International Monetary Fund (IMF) said that Oman should work harder to implement economic reforms, including adjusting government expenditure and expediting the implementation of VAT.
According to a recent report from the Institute of Chartered Accountants of England and Wales (ICAEW) and Oxford Economics, Oman’s economy is expected to experience modestly weaker growth of 2.8 percent this year, down from an estimated 3.3 percent in 2018 but up from the 0.9 percent drop in 2017.
The slowdown is partly driven by forecast oil prices of $67 per barrel, down 5.6 percent from 2018’s average. An estimated 60 percent of Oman’s total budget revenue comes from oil revenue.
“The slump in oil prices has put significant pressure on Oman in the last year,” said Maya Senussi, ICAEW economic advisor and senior economist for Middle East at Oxford Economics. “There is a dire need for an improvement in the non-oil sector and delaying the introduction of VAT has had a significant effect on the fiscal deficit.”