DUBAI: Oman plans to widen exemptions to a value-added tax (VAT) it will introduce this month and increase certain subsidies to mitigate the impact on citizens from the planned VAT, which is being introduced to help the Gulf state bolster its debt-burdened coffers.

Oman will raise the number of food commodities exempted from VAT to 488 from 93 and will raise the level of subsidies on fuel, electricity and water consumption for families receiving government financial support, the state-run Oman News Agency reported on Thursday.

The measures, part of a package to assist families during the pandemic, also exempts low-income citizens from reimbursing housing loans given by the ministry of housing, it said.

Oman will start levying a 5% VAT on April 16 to ensure the sultanate’s financial sustainability after it accumulated huge amounts of debt over the past few years to compensate for lower oil income. It will join Gulf neighbours Saudi Arabia, United Arab Emirates and Bahrain, which have implemented VAT in recent years to diversify state revenue.