Oman imposes 100 percent tax rise

Oman has implemented a ‘long-awaited’ 100 percent increase in tobacco-product taxes, according to a story in The Muscat Daily.

This is the first time in 17 years that the government has raised taxes on tobacco products.

The increase had been discussed during the past six years, but it was only in November 2015 that the finance ministers of the Gulf Co-operation Council (GCC) states approved imposing a 100 percent ‘selective tax’ on tobacco and related products that is equal to the customs duties of these products.

Oman, along with other GCC states, before the current rise levied 100 percent import tax.

Dr. Jawad al Lawati, rapporteur at the National Tobacco Control Committee, told the Muscat Daily that the tax that the government levied on a pack of 20 cigarettes was 200 bz. “It has now been increased to 400 bz,” he said. “This is the first time the government has increased the tax in the last 17 years, even though inflation and prices of all other commodities have gone up several times.”

Lawati said that importers had already passed on the increase to customers by raising the price of a pack of cigarettes from, for instance, RO1.0 to RO1.2.

He said that though GCC states had agreed to increase the tax last year, it was yet to be imposed in three member states. “Bahrain implemented in January, while Saudi Arabia did it in March and Oman followed in September,” he said.

“Kuwait, UAE and Qatar are yet to take action.”

Lawati said also that work aimed at introducing some kind of domestic tax in place of the current import tax was going on. “The domestic tax could become reality in early 2017,” he said.

Oman is planning to do away with customs duty on tobacco products and instead introduce alternative local taxes. The move is aimed at complying with the Free Trade Agreement (FTA) with the US, which provides for a complete duty phase-out by January 1, 2018.

Currently, Oman levies a 100 percent customs duty on cigarettes and tobacco products. But due to FTA rules, all products, including tobacco, will be allowed into Oman duty-free from 2018 onward.