21 September 2016
Muscat - Oman has implemented the long-awaited hundred per cent increase in taxes on tobacco products. This is the first time government has raised the tax on tobacco products in the last 17 years. The talk of the impending increase in tobacco taxes was going on for the last six years, but it was only in November 2015 that finance ministers of the GCC states approved imposing a 100 per cent selective tax on tobacco and related products equal to the customs duties of these products.

The sultanate, along with other GCC states, before the current rise levied 100 per cent import tax.

Dr Jawad al Lawati, rapporteur at the National Tobacco Control Committee, told Muscat Daily that the tax which government levied on a pack of 20 cigarettes was 200bz. "It has now been increased to 400bz. This is the first time the government has increased the tax in the last 17 years, even though inflation and prices of all other commodities have gone up several times."

Dr Lawati added that importers have already passed on the increase to customers by raising the price of a pack of cigarettes from RO1 to RO1.2 and likewise. He added that although GCC states agreed to increase the tax last year, it is yet to be effective in three member states. "Bahrain implemented in January, while Saudi Arabia did it in March and Oman followed in September. Kuwait, UAE and Qatar are yet to take action."

Dr Lawati also said that the work to have some kind of domestic tax in place of the current import tax is going on. "The domestic tax could become reality in early 2017." Oman is planning to do away with customs duty on tobacco products and instead introduce alternative local taxes. The move is aimed at regulating the tobacco market and more precisely, the Free Trade Agreement (FTA) with the US, which provides for a complete duty phase-out by January 1, 2018.

Currently, Oman levies a 100 per cent customs duty on cigarettes and tobacco products. But due to FTA rules, all products, including tobacco, could be brought into Oman duty-free from 2018 onwards.

© Muscat Daily 2016