By Staff writer
VAT is expected to have a certain degree of negative impact on Oman’s GDP due to tightening liquidity in and lower disposable income due to dwindling oil prices
The International Monetary Fund (IMF) is estimating $1 billion (OR 385 million) windfall for the Omani government from value added tax (VAT).
The consumer tax, not conspicuously stated yet, will account for nearly 1.5 per cent of the gross domestic product though the amount can fluctuate depending on variables such as compliance rate and exemptions, the IMF said.
VAT is expected to have a certain degree of negative impact on Oman’s GDP due to tightening liquidity in and lower disposable income due to dwindling oil prices, Times of Oman said.
“All taxes have a negative impact on the overall GDP of the country, but the rate planned is very low by international standards so we expect to have relatively lower impact,” Justin Whitehouse, indirect tax leader – Middle East, Deloitte, told the newspaper.
“Being a consumer tax, individuals will end up paying the VAT, which in turn will affect purchasing power and possibly have an impact on wage demands. If public perception about VAT remains negative, people may trade down and save money due to which high-end products may suffer,” he said.
The GCC countries will implement VAT from January 2018.