Muscat – The Tax Authority has set minimum standard prices for cigarettes and other tobacco products for the calculation of excise tax, with the new rules taking effect from October 1, 2026.

Under Decision No 206/2026, the standard price of a pack containing 20 cigarettes cannot be less than RO1, while shisha and other ready-to-use tobacco products will have a minimum standard price of RO2.5 per 250gm.

The standard price is not necessarily the retail price paid by consumers. It is a reference value used by the Tax Authority to determine the value on which excise tax is calculated.

Under the mechanism, the retail selling price of a tobacco product will be compared with its prescribed standard price. Excise tax will then be calculated on whichever value is higher.

The Tax Authority said the system is intended to ensure that excise tax is not calculated on a value below the prescribed minimum for a product.

For packs or tobacco quantities that differ from the specified amounts, the minimum standard price will be calculated proportionately.

For example, the standard price for 250gm of ready-to-use tobacco will be RO2.5. For 500gm of the same product, the minimum reference value will double to RO5.

Similarly, the RO1 benchmark applies to every 20 cigarettes, with the applicable standard price adjusted proportionately for packs containing a different number.

The decision establishes a minimum value for tax purposes rather than imposing a minimum shop selling price. If a tobacco product is sold at a price higher than the prescribed standard value, the higher retail price will form the basis for calculating excise tax, the authority stated.

The new framework forms part of the Tax Authority’s regulation of excise goods, which are subject to special taxation because of their impact on public health and consumption patterns.