The Ministry of Finance (Income Tax) vide Notification No. 69/2025 dated June 25, 2025, notifies the Protocol amending the Double Taxation Avoidance Agreement (DTAA) between India and Oman, originally signed on 2 April 1997. The Protocol, signed on 27 January 2025 in Muscat, aims to modernize the treaty, enhance tax cooperation, and align with international standards on tax avoidance.
Key amendments include:
- Revised Preamble: The new preamble emphasizes eliminating double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including treaty shopping.
- Definition Changes: Updates to the definition of “competent authority” and “tax year” for both countries.
- Tie-breaker Rule for Dual Residency: For entities that are residents of both countries, residency will be determined by mutual agreement considering factors like place of effective management and incorporation.
- Withholding Tax Reductions: Tax rates on royalties and technical fees are reduced from 15% to 10%.
- Transfer Pricing Adjustment: Introduces provisions for corresponding adjustments to avoid double taxation in transfer pricing cases.
- Deletion of Article 8(5) on Air Transport: Simplifies the taxation rules for air transport enterprises.
- Introduction of Non-Discrimination Clause (Article 25A): Ensures tax equality between nationals and enterprises of both states.
- Enhanced Mutual Agreement Procedure (MAP): Expands the MAP to resolve disputes more effectively.
- Exchange of Information (Article 27): Broadens scope of information exchange, including bank and fiduciary information, to align with international standards.
- Assistance in Tax Collection (Article 27A): Introduces mutual assistance in tax collection.
- Principal Purpose Test (Article 27B): Denies treaty benefits if obtaining them was one of the principal purposes of any transaction unless justified.
The Protocol came into force on 28 May 2025 and applies to income derived in India from fiscal years beginning on or after 1 April following the date of entry into force.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/06/CBDT-Notification-No.-69_2025.pdf
