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      On 15 January 2025, the Sultanate of Oman (Oman) signed a Double Taxation Avoidance Agreement (DTAA) with the Kingdom of Bahrain (Bahrain). This DTAA was ratified by Oman on 2 September 2025 vide Royal Decree 62/2025 and by Bahrain on 23 June 2025.

      On 29 May 2025, Oman also signed a DTAA with the Republic of Kazakhstan (Kazakhstan). This DTAA was ratified by Oman on 4 September 2025 vide Royal Decree 66/2025, but is yet to be ratified by Kazakhstan.

      These DTAAs have not yet come into force. Once entered into force, they will be effective in Oman from the following dates:

      • For withholding taxes - The first day of January following the year in which the DTAAs enter into force
      • For other taxes - The tax year commencing on or after the first day of January following the year in which the DTAAs enters into force

      What are the key provisions of the DTAA with Bahrain and Kazakhstan?

       Oman – Bahrain DTAAOman – Kazakhstan DTAA
      Applicabilitya. Residents of Oman or Bahrain (as defined in the DTAA)

      a. Residents of Oman or Kazakhstan

      (as defined in the DTAA)

      Taxes covered

      a. For Oman – Income tax

      b. For Bahrain – Corporate income tax

       

      Taxes covered also include tax on salaries and wages

      a. For Oman – Income tax

      b. For Kazakhstan – Corporate income tax, individual income tax and tax on property of legal persons and individuals.

      Taxes covered also include tax on salaries and wages

      Nature of income covereda. Like any other DTAA, the Oman - Bahrain DTAA and the Oman - Kazakhstan DTAA cover the taxability of various streams of income such as dividends, interest, royalties, fees for technical services, capital gains, and business income earned by a Permanent Establishment (PE).
      PE related provisions

      a. Broadly aligned with the Organization for Economic Co-operation and Development (OECD) Model.

      b. Covers Fixed Place PE, Construction/Installation/Supervisory PE, Agency PE and Service PE.

      c. Additionally, the Oman-Bahrain DTAA covers Exploration PE i.e. exploration of natural resources for a period exceeding more than 30 days in any 12 month period.

      Tax rates under the DTAA for certain types of incomea. The withholding tax rate on income received by non-residents is 10 percent (under the Oman Income Tax Law) or the rate under the DTAA, whichever is lower or more beneficial.

      The withholding tax rate under the Oman - Bahrain DTAA is:

      a.     Royalty at 8 percent

      b.     Fees for technical services at 8 percent

      c.     Interest at 0 percent*

      b.     Dividend at 0 percent*

      The withholding tax rate under the Oman - Kazakhstan DTAA is:

      a.     Royalty at 10 percent

      b.     Fees for technical services at 10 percent

      c.     Interest at 10 percent*

      d.     Dividend at 10 percent*

      * As per the Royal Directive issued on 11 January 2023, withholding tax on dividends and interest payments by a payor in Oman to non-residents is suspended indefinitely and will prevail over the tax rate under the DTAA.

      Special provisions

      for certain

      institutions

      		a. No separate provisions.

      a. Dividends and interest received by the following Omani institutions, among others, are exempt from tax in Kazakhstan:

      i.       the Government of Oman;

      ii.      the Central Bank of Oman;

      iii.     the Oman Investment Authority;

      iv.    the Oman Development Bank;

      v.     the Export Credit Guarantee Agency S.A.O.C;

      vi.    any retirement or pension fund organized under Omani laws; and

      vii.   any other statutory body or institution wholly owned by the Government of Oman, as may be agreed from time to time between the competent authorities of the Contracting States.

      Alignment with international tax reforms

      a. The Oman - Bahrain DTAA and the Oman - Kazakhstan DTAA reflect Oman’s commitment towards implementing Base Erosion Profit Shifting (BEPS) minimum standards and include:

      i. Mutual Agreement Procedure provisions (BEPS Action 14) for resolution on issues arising due to interpretation of the DTAA; and

      ii. Principal Purpose Test (BEPS Action 6) which aims to deny treaty benefits under certain circumstances.

      Who will be impacted by the DTAA?

      It is important for Omani businesses to consider the impact of these DTAAs on transactions with Bahrain and Kazakhstan based companies, and vice-versa, respectively, from a corporate income tax perspective. This may impact the taxability of various payments made in relation to both inbound and outbound investments, e.g. provision of services, royalty payments and other transactions between the countries. In addition, with Oman announcing the introduction of personal income tax with effect from 1 January 2028, it is equally important for individuals to evaluate the applicability of beneficial provisions of these DTAAs.

      How can KPMG help your organization?

      The interpretation of DTAAs is always evolving and its applicability and interpretation by the relevant authorities may change and develop over time. It is imperative that the articles of the DTAAs are correctly interpreted, particularly since businesses have become digitalized and tax administrations are looking to collect more taxes and levy penalties on aggressive tax positions based on interpretation of DTAAs. Additionally, the conditions for availing benefits under DTAAs are being scrutinized in detail by tax administrations. For instance, based on recent practices, taxpayers are now expected to obtain 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 who are supported by a larger, experienced regional team that can help evaluate if you can use DTAAs to optimize the incidence of tax on your business. If you need assistance in interpreting DTAAs and their implications on your business, please reach out to your advisors at KPMG or the contacts mentioned below.

      Contact us

      Aabha Lekhak
      Partner, Head of Tax
      Oman
      Email

      Vikram Verma
      Partner
      Corporate Tax, Oman
      Email

      Pranav Raval
      Director
      Corporate Tax, Oman
      Email

      Sumit Bansal
      Director
      Indirect Tax, Oman
      Email