Oman to delay VAT to 2021
Oman plans to introduce value-added tax in 2021, it said in a document, further delaying a fiscal consolidation measure that economists say could be politically sensitive at a time of sluggish growth and high unemployment.
All six Gulf Arab states agreed to introduce 5% VAT in 2018 after a slump in oil prices hit their revenues, but Oman, whose financial position is the weakest of the six, delayed its tax to 2019.
Moody’s, Fitch and S&P Global Ratings have said they expect Oman, rated junk by all three major rating agencies, to introduce VAT in 2020.
In a bond prospectus distributed to investors earlier this month, which was seen by Reuters, Oman said the government would increase its revenue base by introducing VAT, “which is expected to be implemented in 2021”.
The delay is a setback for Oman, which the International Monetary Fund this month said should work harder on fiscal reforms, including expediting VAT and measures to adjust government expenditure.
“The focus of Oman has been very much on supporting growth, but they have been very cautious in implementing fiscal reforms to avoid social discontent – unemployment is still high,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.