The implementation of excise tax in Oman follows the issuance of the Royal Decree 23 of 2019 (“the Excise Tax Law “) on 13 March 2019 and the subsequent publication of the Excise Tax Law on 17 March 2019.
The Sultanate of Oman had originally planned to introduce a 5 per cent value-added tax in 2018, which is now scheduled to start in 2020.
According to the Excise Tax Law, its Executive Regulations, which are expected to contain the detailed application of the law, will be published within 6 months from the effective date of the Excise Tax Law.
Excise tax is implemented in Oman with effect on 15 June 2019 in accordance with the unified GCC Excise Tax Agreement, making Oman the fifth GCC country to implement excise tax. A 100% excise tax will be introduced for tobacco products, energy drinks and meat, while a 50% tax will be applied on carbonated drinks.
Excise tax will apply on products that are detrimental to human health or environment, or luxury goods, whether locally produced or imported.
The Secretariat General for Taxation (“SGT”) has released the Excise Tax Implementation Guide and Frequently Asked Questions (FAQs), ahead of the implementation of Excise Tax in Oman.
The Guide shall supplement the Excise Tax law (issued via Royal Decree 23/2019) and the Executive Regulations, which are yet to be published.
The Guide sets out the background and scope of the tax, including details of how businesses should calculate the Excise Tax due, the compliance and reporting obligations, and the transitional period rules for businesses holding stocks of Excise Goods by the date of implementation.
The Excise Tax will apply to importers, and local producers of Excise Goods. In addition, any person holding Excise Goods in their inventory by the date of implementation of the Law, will also have an obligation to account for tax.
This will include businesses such as hotels, restaurants, retail shops and supermarkets.
The Excise Tax Law does not specify the list of excisable goods. However, based on the Implementation Guide on Excise Tax issued by the Secretariat General for Taxation (“SGT”), excise tax will apply to the following products:
- energy drinks at 100%;
- tobacco and tobacco derivatives at 100%;
- carbonated drinks at 50%; and
- special purpose goods (including alcohol and pork products) at 100%.
A. Excise Tax Registration
Any person involved in activities within the scope of Excise Tax must register for the Tax via the SGT portal.
There is no registration threshold for Excise Tax, therefore any business involved in importing, producing or storing Excise Goods should assess their obligation to register for Excise Tax purposes.
The SGT will review the application and issue an Excise Tax number to the taxpayer upon approval.
B. Appointment of Responsible Person
Every registered person is required to appoint a person in charge (e.g., owner, partner, director or manager) and notify the SGT of the appointment.
Where the registered person fails to appoint a person in charge, the SGT may exercise the right to appoint a person in charge on behalf of the registered person.
The person in charge may not stay outside Oman for more than 90 days in a tax year unless prior approval is obtained from the SGT.
C. Calculation and Accounting of the Excise Tax
As in other GCC countries that have implemented Excise Tax, and in line with the provisions set out in GCC Common Excise Tax Agreement, the tax will be calculated on:
- The standard price of the goods determined by the SGT, or
- The retail sales price (RSP) declared by the producer, importer, or tax warehouse licensee.
Excise tax is due on the following dates:
- date of import of excisable goods;
- date on which the excisable goods is released for consumption; and
- date when excisable goods are offered for personal consumption (not relating to the practice of business or activity) within free zones or special economic zones.
D. Excise Tax Exemption
The Sultanate of Oman will exempt:
1. Excisable goods received by the diplomatic and consular bodies, international organizations, heads and members of the diplomatic and consular corps within the Oman, on condition of reciprocity; and
2. Excisable goods held by passengers coming to the Oman provided goods are not brought for commercial purposes and meet the GCC Common Customs Law requirements.
E. Excise Tax Returns
Applications for Excise Tax Returns must be submitted within three months following the end of the tax period.
F. Excise Tax Payment:
The Excise Tax will become due on the date of submission of the excise tax return.
G. Penalties
The Excise Tax Law imposes penalties for non-compliance with tax obligations and tax evasion. The penalties may include imprisonment of 2 months to 3 years and/or fine up to OMR 20,000.
H. Appeals
The person in charge can appeal against the assessment of the tax or against the amendment of the tax return issued by the SGT within 45 days from the date of its knowledge of the assessment or amendment.
The registered person can further appeal against the decision of the Committee to the Court of First Instance.
I. Keeping the Record:
Taxpayers involved in importing, producing or storing Excise Goods will be required to abide by compliance requirements including:
- Maintaining Excise Tax records for 5 years (electronically or via hard copies)
- Registering for Excise Tax purposes and submitting periodic returns and payments
- Ensuring IT systems are configured to manage the risk of non-compliance
- Complying with inventory control systems with respect to the Excise Tax suspension arrangements
- Keeping customs and transport documentation related to the movement of Excise Goods.
