Oman to impose new excise tax this month to boost revenues

Oman has been slow in implementing fiscal reforms aimed at limiting the widening of its budget deficit. (File/AFP)
Updated 09 June 2019
0

Oman to impose new excise tax this month to boost revenues

  • A 100% excise tax will be introduced for tobacco products, energy drinks, among others
  • A 50% tax will be applied on carbonated drinks
DUBAI: Oman will impose a new tax on sugary drinks and tobacco products starting on June 15, as the small Gulf oil producer seeks to boost state revenues strained by years of low oil prices.
A 100% excise tax will be introduced for tobacco products, energy drinks, alcohol and pork meat, while a 50% tax will be applied on carbonated drinks, according to a statement from an official at the Secretariat General for Taxation published by Oman’s state news agency on Saturday.
“The excise tax is a consumption tax and is considered to be indirect taxes. Thus, the final charge is on the consumers, but it is collected in advance at a stage of the supply chain, notably through the business sectors,” said Sulaiman bin Salim Al-A’adi, director general of survey and tax agreements.
Oman has been slow in implementing fiscal reforms aimed at limiting the widening of its budget deficit, while it has increasingly relied on external funding – through bonds and loans – to refill its coffers.
The sultanate had originally planned to introduce a 5% value-added tax in 2018, which is now expected to start in 2020.
“Further delays in implementation, along with a scenario of lower oil prices, pose downside risks to our assumption of narrower fiscal deficits relative to 2015-2017,” S&P Global Ratings said in April, adding that it expected fiscal gains in 2019 coming from the implementation of excise taxes on tobacco and energy drinks.
Oman said at the start of the year it expected its budget deficit to be 2.8 billion rials ($7.27 billion) this year, or 9% of gross domestic product.
Sources told Reuters last month that to cover part of the deficit, Oman is expected to issue a new international bond soon in a deal likely to go up to $2 billion in size.


Kuwaiti equities to be in main MSCI emerging markets index

Updated 51 sec ago
0

Kuwaiti equities to be in main MSCI emerging markets index

  • The index compiler will include the MSCI Kuwait index in the emerging market index in the May 2020 semi-annual index review
  • The Kuwaiti market has outperformed markets in the Middle East this year in anticipation of the MSCI move

DUBAI: MSCI plans to upgrade Kuwaiti equities to its main emerging markets index in 2020, a move that could trigger billions of dollars of inflows from passive funds.
The index compiler will include the MSCI Kuwait index in the emerging market index in the May 2020 semi-annual index review.
MSCI, the world’s largest index provider, whose emerging-market group of indexes has about $1.8 trillion of assets tied to it, also said it would start a consultation on reclassifying the MSCI Iceland Index to Frontier Markets status. It said it would announce the results of this by Nov. 29.
Kuwait’s Market Development Project was implementing several regulatory and operational enhancements in the Kuwaiti equity market, said Sebastien Lieblich, global head of equity solutions and chairman of the MSCI Equity Index Committee.

 

MSCI expects Kuwait to introduce more reforms before the end of 2019, such as introducing omnibus accounts that would allow foreign investors to trade while remaining anonymous, offering the same privileges that local investors now have.
The Kuwaiti capital market regulator has announced plans for such facilities to be available to the wider market by November, Arqaam Capital said. “These enhancements have significantly increased the accessibility level of the Kuwaiti equity market for international institutional investors,” Lieblich said.
The Kuwaiti market has outperformed markets in the Middle East this year in anticipation of the MSCI move.
The benchmark premier index is up about 20 percent so far this year. It was down 0.5% in early trade on Wednesday.
“MSCI EM inclusion could represent the biggest ever liquidity event for Kuwait’s stock market,” said Salah Shamma, head of investment MENA at Franklin Templeton Emerging Markets Equity, adding that a 0.5 percent representation in the MSCI EM index could attract investor flows of about $10 billion.

FACTOID

MSCI is the world’s largest index provider, whose emerging-market group of indexes has about $1.8 trillion of assets tied to it.