The new Excise Tax law in Oman is consequent to the Gulf Cooperation Council (GCC)–wide agreement, which will help to promote a healthier lifestyle within the society and, additionally, will support the state’s budget with revenue that can be redirected to enhance healthcare and social services in the country. The Excise Tax has been implemented by the GCC member staThe new Excise Tax law in Oman is consequent to thetes in stages, in accordance with the Common Excise Tax Agreement signed in 2016. The Kingdom of Saudi Arabia was the first country to implement the Excise Tax in 2017, followed by the United Arab Emirates in 2017 and the Kingdom of Bahrain in 2018.other liable persons dealing in excisable
The Oman National Excise Tax Law issued by Royal Decree 23/2019 on 13 March 2019 was published in the Official Gazette on 17 March 2019 with an effective date of 15 June 2019. The related Executive Regulations are expected to be issued within six months of the date of publication. The Excise Tax is a tax on specific goods which are harmful to an individual’s health and/or to the environment. It is a consumption tax which is ultimately borne by the consumer and is collected by businesses (i.e. liable person) on behalf of the Secretariat General for Taxation (SGT).
A) Obligations of the taxpayer
Importers of excisable goods, manufacturers, holders, licensees and other liable persons dealing in excisable goods need to get registered for Excise Tax with the SGT on or before 15 June 2019, declare details of excisable goods held by them, submit periodical Excise Tax returns, pay excise taxes and maintain all related records for at least 5 years.
B) Excisable goods
Excise Tax will be levied on the following goods:
(i) Tobacco and tobacco derivatives
This product group includes but is not limited to cigars, cigarettes, cigarillos, water pipe tobacco, and other tobacco products. The excise tax rate for tobacco and its derivatives is 100%.
(ii) Carbonated drinks
This is any aerated beverage, except unflavoured carbonated water (soda). It includes carbonated water with added sugar or other sweeteners or flavors such as cola or soda derivatives. It also covers concentrates, powders, gels and extracts intended to be made into carbonated beverages. The excise tax rate for carbonated drinks is 50%.
(iii) Energy drinks
This is any beverage containing stimulant substances that is marketed or sold as an energy drink for providing mental and physical stimulation. It also covers concentrates, powders, gels or extracts intended to be made into energy drinks. The excise tax rate for energy drinks is 100%.
(iv) Other special purpose goods
Special purpose goods for Excise Tax purposes includes goods that are consumed under specific conditions and authorizations. Presently, only alcohol and pork products have been named as special purpose Excise Goods. The excise tax rate for special purpose goods is 100%.
Excise tax will be calculated as a percentage of the Excise Tax base of the Excisable Goods. The Excise Tax base of the goods shall be the higher of the following:
- The standard price determined by the SGT; or
- The retail sales price declared by the producer, importer, licensee or liable person of any Excise Goods
after deducting any Excise Tax amount included in that price.
D) One-time Transitional Excise Tax Return
Businesses that holds stocks of goods (Producers, Importers, Wholesalers, Retail Shops and Supermarkets, Hotels and Restaurants, etc.) which are liable to excise tax (as mentioned above) for commercial purpose on the implementation date need to file a ‘one-time’ transitional Excise Tax return with respect to goods held for business purposes at midnight on June 14, 2019. The Transitional Excise Tax return is required to be filed by 30 June 2019, and the business must pay any Excise Tax due upon filing this return.
E) Periodical filing of Excise Tax Returns
Businesses which are engaged in importing, exporting, manufacturing or warehousing of any of the excisable goods as mentioned above will be required to obtain an ‘Excise Tax Registration Number’, and will have to file periodical (informal discussion with the concerned tax inspector in the SGT indicates this will be on quarterly basis) tax returns and pay taxes due.
F) Tax Assessments
The excise tax will be a self-assessed tax, which the businesses will collect on behalf of the SGT from the customers and pay to the SGT along with the Excise Tax return periodically. The SGT has the power to perform audits of the taxpayers and may call for any details or supporting documents as it feels is warranted.
In case of delay/failure to abide with any of the provisions of the law, the SGT has the power to impose penalties on the taxpayers in accordance with the tax regulation.
[The note above is a limited extract of the excise tax implementation guide and, also, is based on informal discussions with the tax authorities in Oman. Consequently, the note should not be construed as conclusive tax advice. Professional tax advice should be taken before acting, or not acting, on any of the matters in the above note.]
(This article is compiled by Abhishek R. Vaishya, Deputy Manager in PKF L.L.C. and PKF Tax Team, the PKF member firm in the Sultanate of Oman)