Govt. Notifies Protocol Amending India-Oman DTAA

Notification No. 69/2025, dated 25-06-2025

The Central Government has notified the protocol amending India-Oman DTAA. The Protocol was signed in January 2025 and entered into force on May 28, 2025. It shall take effect in India from April 1 of the fiscal year following the year in which it enters into force. Thus, it shall apply in India from the financial year 2026-27.

The Protocol introduces the following changes in various Articles of the DTAA:

• Article 1 (Scope) – The preamble now explicitly emphasises the intent to eliminate double taxation and prevent tax evasion or avoidance, including through treaty-shopping arrangements aimed at benefiting residents of third states.
• Article 2 (Taxes Covered) – The definition of taxes covered is updated to include “Omani tax,” referring to income tax in Oman.
• Article 3 (Definitions) – The definition of “competent authority” for Oman has been updated to refer to the Chairman of the Tax Authority or their authorised representative. For India, it remains the Finance Minister or their authorised representative. The definition of “tax year” in Oman is also clarified in accordance with Omani income tax law.
• Article 4 (Resident) – If a person (other than an individual) is a resident of both contracting states, the competent authorities shall determine residency by mutual agreement.
• Article 8 (Air Transport) – The scope of the article is expanded to cover all entities engaged in the operation of aircraft, not just specified entities.
• Article 10 (Associated Enterprises) – A new paragraph has been inserted to allow appropriate adjustments where an enterprise of one state is taxed on profits from a related enterprise in the other state, provided the conditions are similar to those between independent enterprises.
• Article 13 (Royalties) – The withholding tax rate on royalties has been reduced from 15% to 10%.
• Article 14 (Technical Fees) – The withholding tax rate on technical fees has also been reduced from 15% to 10%.
• Article 25A (Non-discrimination) – A new Article 25A has been inserted to prevent discrimination against nationals of either contracting state, ensuring fair taxation and treatment for both enterprises and individuals.
• Article 26 (Mutual Agreement Procedure) – The mutual agreement procedure has been clarified to ensure that disputes over tax treatment can be resolved within three years of notification, even if domestic law provides a different time limit.
• Article 27 (Exchange of Information) – The provision has been expanded to allow for the exchange of information relevant to tax enforcement, with an obligation to treat such information confidentially.
• Article 27A (Assistance in the Collection of Taxes) – A new Article 27A has been introduced to provide for mutual assistance in the collection of tax claims.
• Article 27B (Entitlement to Benefits) – A new Article 27B has been inserted, which provides that benefits under the DTAA may be denied if it is determined that obtaining the benefit was one of the principal purposes of the arrangement or transaction.

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