Oman’s Shura Council, a top advisory body to the government, has voted for the biggest increases in corporate taxes in many years to offset a budget deficit caused by low oil prices, local media reported yesterday.
Any tax rises would need to be approved by the cabinet, but the Shura Council’s assent is a major step towards the change. The finance ministry is expected to announce the 2016 budget around the start of next year.
Oil exporting countries around the Gulf are planning tax hikes to cope with the plunge in energy prices since last year. But increases in Oman look likely to come sooner and be larger than in other countries because it lacks their huge financial reserves.
The Times of Oman quoted Tawfiq al-Lawati, a member of the council’s economy committee, as saying it voted on Tuesday to raise the 12% corporate tax rate to 15%.
The tax-free ceiling of 30,000 rials ($77,920) for companies would be abolished, and all firms previously exempt from taxation would be taxed, he added.
The tax on producers of liquid natural gas would be raised to 55% from 12% to bring it in line with the levy on oil companies, while other firms related to the oil and gas industry would pay 35% instead of 12%.
“We won’t be able to totally resolve the financial crunch caused by the oil price dip with these tax reforms. However, these are the only measures which can be adopted ...with less impact on citizens,” Lawati was quoted as saying.
Oman has also been considering other ways to save money and generate new revenues, such as reducing domestic fuel subsidies, but that would be more politically sensitive. The government posted a budget deficit of 3.26bn rials ($8.5bn) in the first 10 months of this year.