Reuters
Dubai


A proposal to raise taxes on Oman’s telecoms companies to help to pay for the country’s budget deficit will put future investment in the industry at risk, the chief executive of the sultanate’s second-biggest mobile network operator Ooredoo Oman said yesterday.
Last November, Oman’s Shura Council, which advises the government, suggested reforms to boost Oman’s non-oil tax income, including a 12% royalty on telecoms operators’ revenues.
“That’s of significant concern to us because it’s a direct hit to our profitability,” Greg Young, Ooredoo Oman chief executive told Reuters on the sidelines of a conference in Dubai. “There’s a direct linkage between our profitability and our ability to continue to invest,” he said.
“Our view is that change is necessary at the company taxation level and should be applied universally across all sectors, rather than something specifically aimed at the telecom sector.”
Oman posted a budget deficit of 1.50bn rials ($3.90bn) in the first five months of this year, swinging from a 232.9mn rial surplus a year earlier because of lower oil export prices.
Ooredoo Oman, majority-owned by Qatar’s Ooredoo, and former monopoly Oman Telecommunications (Omantel) pay 7% of their gross revenue in royalties — or tax — plus 12% of profits in Corp tax.
The company’s capital expenditure to revenue ratio was 34% in 2014, which compares with a global average for operators of about 17% in 2014-19, according to IT and telecoms analysts Ovum.
Young said his firm could spend so heavily because of current tax rates. But he said Ooredoo Oman’s ratio would likely fall to 30% this year and to below 30% in 2016 as some of its long-term projects near completion.