Excise tax will be implemented in Oman with effect from 15 June 2019 in accordance with the unified GCC Excise Tax Agreement, making Oman the fifth GCC country to implement excise tax. 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.
Excise tax is intended to apply on products that are detrimental to human health or environment, or luxury goods, whether locally produced or imported. 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:
Excise tax is calculated on the higher of the standard price of goods as determined by the SGT or the retail sales price declared by the producer, importer or tax warehouse licensee.
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 (i.e., on or around 15 December 2019.
Key Features of Oman Excise Tax System
The key features of the excise tax regime are as follows:
Excise Tax Registration: Every person who produces, imports or holds excisable goods in Oman is required to register for excise tax. As an exception, a person who imports excisable goods on an irregular basis will not be required to register for excise tax.
Appointment of Responsible Person: Every registered person is required to appoint a responsible person (e.g., owner, partner, director or manager) and notify the SGT of the appointment. Where the registered person fails to appoint a responsible person, the SGT may exercise the right to appoint the responsible person on behalf of the registered person. The responsible person may not stay outside Oman for more than 90 days in a tax year unless prior approval is obtained from the SGT.
Accounting of Excise Tax: Excise tax is due on the following dates:
Import of Excisable Goods: The importer of excisable goods is required to notify the SGT of the types of imported goods as well as their quantity, value and the value of tax paid to the Directorate General of Customs (“DGC”). The DGC will collect the tax on imported goods subject to excise and the value prescribed, and will then deposit the same in a special account to be opened for excise tax purposes. In the event of suspended payment of customs duty, the
importer of excisable goods will furnish to the DGC a bank guarantee equivalent to the amount of the tax due and such bank guarantee can only be released after the excise tax is paid.
Excise Tax Exemption: Oman will exempt (i) 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 (ii) 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.
Transitional Excise Tax Return: The Implementation Guide on Excise Tax sets out the procedure to submit a one off excise tax return for the transitional period. In addition to importers, producers and warehouse operators, businesses that own or intend to sell excise goods for commercial purposes are required to submit a transitional excise tax return by 30 June 2019.
Excise Tax Returns: Will be required to be submitted within three months following the end of the tax period.
Excise Tax Payment: The payment of tax will become due on the date of submission of the excise tax return.
Record Keeping: Regular accounting records and books (evidencing the transactions relating to the excisable goods) are required to be maintained for a period of 5 years.
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.
Appeals: The registered person 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.
What should you do next?
It is important for businesses that import, produce or hold excise goods to assess the impact of excise tax on their business operations and commence preparation for the implementation of excise tax immediately.
As the largest law firm in the Middle East and with strong tax expertise and significant tax experience for all taxes across all industry sectors in the Middle East, Al Tamimi & Company is well placed to assess the impact of excise tax on your organisation and assist you with all excise tax requirements in Oman.