(MENAFN- Gulf Times) Oman will delay the introduction of a 5 percent value-added tax until 2019 instead of introducing it next year as originally planned, local media reported late on Monday, a decision that may hurt its effort to strengthen state finances.
To boost state revenues, which have been strained by years of low oil prices, Oman will impose a new tax on sugary drinks and tobacco products by mid-2018, the Times of Oman reported, quoting finance ministry sources. Some other GCC members introduced such a tax this year.
The International Monetary Fund has estimated a 5 percent VAT in Oman could raise about 1.7 percent of gross domeestic product, or around $1.3 billion, for the government.
Earlier this month, Fitch Ratings cut Oman's credit rating by one notch to BBB-minus - just above junk territory - with a negative outlook, citing the country's big budget deficit, which it estimated at 12.8 percent of gross domestic product in 2017. Standard & Poor's already rates Omani debt as junk.
Oman's state budget deficit for the first 10 months of 2017 narrowed to 3.20 billion rials ($8.31 billion) from 4.81 billion rials a year earlier, according to finance ministry data.
Tax experts in the region believe Kuwait will also lag considerably in introducing VAT, partly because of its slow-moving civil service and because it's relatively independent parliament may want a say in the process.
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