The Ministry of Finance has notified the amendment in Double Taxation Avoidance Agreement (DTAA) between India and the Sultanate of Oman through a new protocol signed on January 27, 2025, in Muscat, which is effective from May 28, 2025.
The protocol modernizes several key aspects of the 1997 DTAA between the two countries and aligns the agreement with contemporary international tax standards, particularly those advocated by the OECD and G20.
Reduced Tax Rates
The withholding tax on royalties and technical fees has been reduced from 15% to 10%, benefiting companies involved in technology transfer and intellectual property use.
Anti-Abuse Provisions Introduced
A new Article 27B includes a Principal Purpose Test (PPT), which denies treaty benefits if one of the main purposes of any transaction is to obtain such benefits inappropriately. This aims to curb treaty shopping and round-tripping.
Expanded Information Exchange
Article 27 now allows for a broader and more efficient exchange of tax-related information between the two governments, including data held by banks and financial institutions.
Assistance in Tax Collection
A new Article 27A provides a legal framework for mutual assistance in the recovery and enforcement of tax claims, bolstering cross-border tax administration and compliance.
Non-Discrimination Clause
Article 25A prohibits tax discrimination against foreign nationals or enterprises, ensuring fair treatment of Omani businesses in India and vice versa.
Updated Definitions and Technical Clarifications
Terms like “competent authority”, “tax year”, and rules for determining residency for entities with dual residence have been revised for better clarity and application.
Deletion of Outdated Provisions
Certain redundant paragraphs, such as Paragraph 5 of Article 8 and Paragraph 4 of Article 25 in the original agreement, have been deleted to streamline the text.
The revised protocol will apply in India for income derived from fiscal years beginning on or after April 1, 2025, and in Oman for income derived in any tax year following the protocol’s entry into force.
Notification Details
Notification No. 69/2025
Date: 25/06/2025
