(MENAFN- The Peninsula)
DUBAI: 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 on Wednesday.
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 percent corporate tax rate to 15 percent.
The tax-free ceiling of 30000 rials ($77920) 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 percent from 12 percent to bring it in line with the levy on oil companies while other firms related to the oil and gas industry would pay 35 percent instead of 12 percent.
"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 3.26 billion rials ($8.5 billion) in the first 10 months of this year swinging from a 189.6 million rial surplus a year earlier finance ministry data shows.
Reuters