VAT in Oman among lowest in world

Dr Syed Mujahid Hussain, the head of the Department of Economics and Finance at the College of Economics and Political Science at Sultan Qaboos University, said the rate of VAT in Oman was among the lowest in the world, and would not affect the cost of living among people all that much.

“I used to previously live in Europe, where the VAT attached to companies was as high as 30 percent, so compared to that, five percent is very little,” he said.

“Western countries fund a lot of their public services through taxation, such as income tax, corporate tax, and value-added tax, so Oman and the other GCC countries are also looking to fund their works through this mode of taxation.”

According to Oman’s Tax Authority, Oman’s VAT rate is at par with the United Arab Emirates, and significantly lower than the tax rates levied in Australia (10 per cent), Egypt (14 per cent), Turkey (18 per cent), Germany (19 per cent), France, and the UK (both 20 per cent).

“VAT is not a direct source of income in that it will be put into the economy, but it will be used by the government to fund their services and their programmes, some of which will be used for social and economic development,” added Hussain. “This might affect people’s spending habits a bit, because some of them will feel the pinch VAT puts on them, but even then, it is far lower than it is in other countries, so the impact felt won’t be that high.

“What this will do is provide the government a steady and guaranteed stream of income,” he said.

GCC countries

“This will decrease their dependence on revenue made from economic exports. Many of the GCC countries receive their primary source of income through the export of fossil fuels such as oil and gas, so this provides one of many possible alternative revenue streams.”

Adding to this, Dr Haider Al Lawati, an economic researcher, said, “In introducing VAT, the Gulf countries have shown that they are indeed keen on diversifying their economies away from oil and gas, with the wealth generated from citizens and residents being a key source of income.

“Additional taxes will help budgets of these countries centre not just around the products they create, which are primarily related to oil and gas, but on the wealth generated by people within the country as well.”