India-Oman Tax Pact Update: Lower Rates and New Rules for Cross-Border Earners

India-Oman DTAA Update: What the New Tax Treaty Means for Professionals and Business Owners

Revised Agreement Lowers Tax Burden, Increases Transparency, and Eases Cross-Border Compliance

India and Oman have officially amended their Double Taxation Avoidance Agreement (DTAA), with the changes taking effect on May 28, 2025. The updated treaty, first established in 1997, is designed to reflect modern global tax practices and simplify tax obligations for individuals and businesses active in both countries.

Eliminating Double Taxation

The revised DTAA ensures that income earned in both India and Oman is not taxed twice, providing significant relief to salaried professionals, freelancers, and business owners.

• This update is particularly relevant for Indian residents investing in Oman and Omani professionals or investors with interests in India.
• The agreement clarifies tax residency and income allocation, reducing ambiguity for cross-border earners.

Lower Tax Rates on Royalties and Technical Services

One of the most significant changes is the reduction of tax rates on royalties and fees for technical services from 15% to 10%.

• This move is expected to promote technology transfer and cross-border investment, making professional engagements and business operations more cost-effective for both sides.
• The treaty also refines definitions and procedures to keep up with evolving economic activities.

Enhanced Dispute Resolution and Anti-Abuse Provisions

The revised DTAA introduces a stronger Mutual Agreement Procedure (MAP) to help resolve tax disputes more efficiently.

• Anti-abuse measures have been added to prevent treaty shopping and ensure only genuine residents benefit from the agreement.
• Enhanced data exchange, including financial and banking information, is set to make cross-border tax evasion more difficult.

Non-Discrimination and Fair Taxation

A non-discrimination clause in the treaty guarantees tax parity for Indian and Omani entities operating in each other’s countries.

• This supports a level playing field and further encourages bilateral business activity.

Oman to Introduce Personal Income Tax

In a landmark shift, Oman will become the first GCC nation to introduce personal income tax, starting January 2028.

• The planned 5% tax will apply to individuals earning above OMR 42,000.
• This makes Oman unique in the region, as other GCC countries like the UAE, Saudi Arabia, and Qatar do not yet tax personal income.

Expert Insights on the DTAA Amendment

Experts view the revised DTAA as a positive step toward “fair and clear taxation” and better international cooperation.

• Sudhir Kaushik of Taxspanner.com highlighted the importance of strengthened information sharing and non-discrimination for honest taxpayers and effective enforcement.
• Pankaj Agrawal of Grant Thornton emphasized the updated protocols for dispute resolution and information exchange as key advantages.

As India and Oman continue to expand economic ties, the updated DTAA is expected to make cross-border compliance simpler, more transparent, and more equitable for all stakeholders.