On 17 October 2024, the Sultanate of Oman (Oman) signed a Double Taxation Avoidance Agreement (DTAA) with the Grand Duchy of Luxembourg (Luxembourg), to eliminate double taxation on income and prevent tax evasion. On 27 October 2024, Oman also signed a DTAA with the Republic of Estonia (Estonia).
The DTAAs are yet to be ratified and will be effective after ratification instruments are exchanged. The official text of the DTAAs is yet to be published.
DTAAs, among others, may impact the taxability of payments in relation to both inbound and outbound investments, e.g. provision of service, royalty, management fee etc. between Oman and the two countries. It would be important for Omani businesses to consider the impact of the DTAA on transactions with Luxembourg and Estonian resident companies from a tax perspective and vice-versa.
Oman’s double tax treaty network is steadily increasing. With the recent additions, Oman has now signed DTAAs with over 40 countries. While DTAAs help optimize the incidence of tax, the interpretation of DTAAs is evolving and the conditions for availing benefits under DTAAs are being scrutinized by tax administrations. On the basis of recent practices, taxpayers are now expected to obtain a formal confirmation from the Oman Tax Authority before availing treaty benefits in Oman.
KPMG has a dedicated team of experienced corporate income tax specialists based in Oman, supported by a larger, experienced regional team that can help you evaluate if you can use the DTAAs to optimize the incidence of tax on your business.
If you need further information, please reach out to your advisors at KPMG or the contacts mentioned below.
