More tax in the Middle East: Oman joins Saudi and Qatar in introducing tax on energy and soft drinks

By Tingmin Koe

- Last updated on GMT

Oman will be imposing a 100% tax on energy drinks and alcoholic beverages and a 50% tax on soft drinks in 10 days' time. ©Getty Images
Oman will be imposing a 100% tax on energy drinks and alcoholic beverages and a 50% tax on soft drinks in 10 days' time. ©Getty Images
Oman is joining other GCC states, including Saudi Arabia, the UAE, and Qatar in implementing a selective tax on energy drinks, soft drinks, alcoholic beverages, and tobacco.

Similar to Qatar, it has added pork meat into the list of items to be taxed.

The tax rate for tobacco, pork, alcoholic beverages and energy drinks is set at 100% while that of soft drinks is 50%, according to an announcement by Oman’s Secretariat General for Taxation (SGT).

The tax, which will be implemented from June 15, is applicable to both local manufacturers and importing companies.

“The registration is subject to selective taxes on importers and producers of selective goods, and all those who put these goods for consumption, and anyone who owns them in possession of it, and authorised by the Secretariat General for Taxation to establish a tax warehouse,” the SGT said in a statement.

In addition, sellers, manufacturers, and importers will need to declare that they are dealing with these products before the tax officially kicks in.

"Any person engaged in an activity relating to selective goods such as import, production, trade or distribution shall submit a transitional declaration on the day preceding the date of application of the tax, to be calculated and payable within 15 days from the date of application of the tax,"Times of Oman​ cited the country’s Government Communications Centre.

The introduction of a selective or sin tax is practiced by all the GCC states as a result of a decision announced by the Supreme Council of GCC at the 36th​ session held in Riyadh four years ago.

Saudi Arabia took the lead​ in introducing the taxes in 2017, similarly applying a 100% tax rate on energy drinks and tobacco and 50% tax rate on carbonated drinks.

The UAE and Bahrain followed suit in the same year while Qatar did so on January 1 this year.

This leaves Kuwait as the only GCC state which has yet to implement the tax.

As for Saudi Arabia, it even went a step further, with its General Authority of Zakat and Tax announcing last month that all drinks with added sugar would be taxed 50%.

Tax effect

According to market research reports, consumers are reacting to the tax rate by limiting their intake or switching to healthier soft drinks options. 

A Euromonitor report in March said that the Saudi consumers were perceiving the energy and soft drinks as being expensive and unhealthy, and some were switching to RTD tea and coffee instead.

As a result, it expected soft drinks companies to develop products in line with the health and wellness trend, examples being reduced sugar, natural ingredients, organic products, added vitamins and minerals, and smaller pack sizes.

In the case of UAE, Euromonitor also noted that the local companies are focusing more on functional products. These include multi-fruit formats in nectars, zero sodium water, waters with higher pH values, low fat RTD coffee and natural sweeteners in energy drinks.

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