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Excise Tax (also called as ‘sin tax’) is expected to be introduced in the Sultanate of Oman from 1 June 2019 following similar moves by other GCC Countries in recent years.
The tax would be levied on products such as tobacco, alcohol, energy drinks and carbonated drinks. It is levied on goods which are considered detrimental to the health of general public with an aim to discourage consumption of those specific products.
Excise Tax will impact all businesses that manufacture, import, stockpile the specified products (like Tobacco and Energy drinks) including business holding stock of such goods on the date of implementation of Excise Tax. Unlike Value Added Tax (VAT) which is a multiple point tax levied at each stage of sale, Excise Tax would be single point tax levied at the first stage of import or manufacture.
Considering the tax rate could be as high as 100% in case of tobacco and energy drinks, it is imperative for businesses to ascertain the impact of the Excise Tax on business operations and gear up for transitioning into the Excise Tax regime.
Businesses need to gear up and undertake an Excise Tax Assessment to:
- Assess the requirements to obtain Excise Tax registration which is expected to begin shortly
- Understand and evaluate the impact of Excise Tax on business operations
- Evaluate the impact on transitional issues (transitional stock, average stock to be maintained, pricing of products, cash flow issues, supply chain management, etc.)
- Make changes in the IT systems and ERP from an Excise Tax perspective
- Identify the possibilities of change in business operations to achieve tax optimization
- Conduct training of various stakeholders such as team members and trade partners
- Prepare Standard Operating Procedures (including Compliance Manual)
- Analyse various compliances such as filing of Excise Tax returns and payment of taxes.
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For further details, please contact Vinodh Raman (vinodh.raman@moore-oman.com) / Nitya Shankaran (nitya.shankaran@moore-oman.com).
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