In a significant move to enhance bilateral economic relations and streamline cross-border taxation, India and Oman have agreed to amend the Double Taxation Avoidance Agreement (DTAA) between the two nations. The protocol to amend the DTAA was signed during the visit of India’s Commerce and Industry Minister, Piyush Goyal, to Muscat. This development marks a pivotal step in aligning the tax treaty with international standards, simplifying tax procedures, and promoting greater cooperation in tax matters.
The original DTAA, titled “Agreement Between the Republic of India and the Sultanate of Oman for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income,” was signed in 1997. The treaty was designed to prevent double taxation of income earned in one country by residents of the other, thereby fostering economic cooperation and reducing tax-related hurdles for businesses and individuals operating across borders. Over the years, the treaty has played a crucial role in facilitating trade and investment between India and Oman. However, with evolving global tax norms and the need for greater transparency, both nations have recognized the necessity to update the agreement.
The amended protocol seeks to bring the India-Oman DTAA in line with international standards, particularly those set by the Organisation for Economic Co-operation and Development (OECD) and the Base Erosion and Profit Shifting (BEPS) framework. These changes are aimed at addressing tax evasion, preventing treaty abuse, and ensuring a fair allocation of taxing rights between the two countries.
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The amendments to the India-Oman DTAA are expected to have far-reaching implications for businesses and individuals engaged in cross-border activities between the two countries. By aligning the treaty with international standards, the revised agreement will provide greater clarity and certainty regarding tax obligations, reducing the risk of double taxation and disputes.
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For Indian businesses operating in Oman, the amended treaty will simplify tax compliance and reduce the overall tax burden, making it easier to expand operations and invest in the region. Similarly, Omani businesses and investors in India will benefit from streamlined tax procedures and enhanced protection against double taxation.
The inclusion of provisions related to the exchange of information and mutual agreement procedures will also strengthen the ability of tax authorities to combat tax evasion and ensure compliance with tax laws. This is particularly important in the context of increasing cross-border trade and investment, where tax evasion and avoidance can have significant fiscal implications.
The amendment of the DTAA is part of a broader effort to strengthen economic ties between India and Oman. During his visit to Muscat, Minister Piyush Goyal also held discussions with Oman’s Minister of Commerce, Industry, and Investment Promotion, Qais bin Mohammed Al Yousef, on the proposed India-Oman Comprehensive Economic Partnership Agreement (CEPA). The CEPA, which is in advanced stages of negotiation, aims to boost two-way trade and investment by reducing or eliminating customs duties on a wide range of goods and services.
Oman is India’s third-largest export destination among the Gulf Cooperation Council (GCC) countries, and the two nations share a robust trade relationship. However, bilateral trade has seen a decline in recent years, dropping from 12.39 billion in 2022–23 to 8.94 billion in 2023–24. The CEPA, along with the amended DTAA, is expected to reverse this trend by creating a more favorable environment for trade and investment.
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India already has a similar agreement with the United Arab Emirates (UAE), another GCC member, which came into effect in May 2022. The success of the India-UAE CEPA has set a positive precedent for the proposed agreement with Oman, highlighting the potential benefits of such partnerships in enhancing economic cooperation.
The amendment of the India-Oman DTAA represents a significant step forward in the economic relationship between the two nations. By aligning the treaty with international standards, simplifying tax procedures, and promoting greater cooperation in tax matters, the revised agreement will create a more conducive environment for cross-border trade and investment. This, coupled with the proposed CEPA, underscores the commitment of both countries to deepening their economic ties and fostering mutual growth.
As businesses and individuals navigate the complexities of cross-border taxation, the amended DTAA will provide much-needed clarity and certainty, reducing the risk of double taxation and disputes. At the same time, the enhanced cooperation between the tax authorities of India and Oman will strengthen their ability to combat tax evasion and ensure compliance with tax laws.
In a rapidly changing global economy, such agreements are essential for promoting economic cooperation and ensuring that the benefits of globalization are shared equitably. The India-Oman DTAA amendment is a testament to the enduring partnership between the two nations and their shared vision for a prosperous future.
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