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India-Oman Double Taxation Avoidance Agreement (DTAA)

The government of the Sultanate of Oman and the government of the Republic of India have established a Double Taxation Avoidance Agreement (DTAA) to prevent double taxation and fiscal evasion concerning taxes on income. The agreement became effective on June 3, 1997. Double taxation typically occurs when a non-resident individual or entity becomes liable to pay taxes on income earned both in their country of residence and the country where the income is generated.

Applicability

This DTAA applies to individuals or entities who are residents of either or both of the two states. The taxes covered by this agreement are as follows:

  • In India: It covers income tax, including any surcharge.
  • In the Sultanate of Oman: It includes the company income tax and the profit tax on commercial and industrial establishments.

Key Takeaways

Here are some key provisions of the India-Oman DTAA:

  1. Taxation of Immovable Property: Income derived by a resident of one state from immovable property located in the other state may be subject to taxation in that other state.
  2. Business Profits: The profits of an enterprise of one contracting state are taxable only in that state unless the enterprise operates through a permanent establishment in the other state.
  3. Aircraft in International Traffic: Profits derived by an enterprise of a contracting state from the operation of aircraft in international traffic are taxable only in that contracting state.
  4. Entertainers and Sportspersons: Income earned by a resident of one contracting state as an entertainer or sportsperson performing in the other state may be taxed in that other state.
  5. Exchange of Information: The authorities of both contracting states shall exchange information related to taxes as necessary to implement the provisions of the DTAA.
  6. Withholding Tax Rates: The DTAA specifies beneficial withholding tax rates:
    • 10% on dividends (if at least 10% of shares are held by the recipient company) and 12.5% in other cases.
    • 10% on interests.
    • 15% for royalties and fees for technical services.
  7. Diplomatic and Consular Privileges: The agreement ensures that fiscal privileges of diplomatic or consular officials are not affected by the DTAA.

Inference

The India-Oman DTAA has played a significant role in facilitating trade and investments between the two countries. Several Indian companies have made investments in Oman across various sectors, such as iron and steel, cement, fertilizers, textiles, cables, chemicals, and automotive. However, non-resident entities operating in Oman must be aware of their tax obligations, as a taxable presence in Oman could be triggered due to their activities related to business or contracts within the country.

Despite being an agreement established almost 25 years ago, the India-Oman DTAA aligns with internationally accepted standards and practices in the realm of double taxation avoidance.

For expert legal advice, assistance, or more in-depth information about the India-Oman Double Taxation Avoidance Agreement, please do not hesitate to contact Chandrawat & Partners. Our legal experts specialize in international tax agreements and are dedicated to providing tailored legal support that meets your specific needs. We are committed to delivering high-quality legal services, ensuring your satisfaction and legal peace of mind. If you have any inquiries or wish to discuss your legal concerns, please don’t hesitate to contact us. We are here to serve your legal needs with professionalism and diligence.

To know more about DTAA relations between India and Oman, please download our Guide.

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