Oman Signs Double Tax Treaty with Russia

The two countries recently inked a Double Tax Treaty Agreement to promote investment between Oman and Russia and strengthen their economic connections. The agreement, which covers a variety of tax laws, aims to end the problem of double taxation and improve tax-related cooperation.

A wide number of industries are covered by the Double Tax Treaty Agreement between Oman and Russia, which also lays out precise rules for the taxation of income and capital gains. The agreement with Oman says a 15% general dividend withholding tax and a 10% reduced rate for businesses owning at least a 20% stake in the dividend payer.

Existing taxes to which this Agreement applies, in particular, are:

In the Russian Federation,

1. Corporate Income Tax; And
2. Personal Income Tax (hereinafter referred to as "Russian tax");

In the Sultanate of Oman, 

1. Income tax (hereinafter referred to as "Omani tax").

Russia has published Decree No. 2073-r of 28 July 2022 in the Official Gazette that provides the following summary of the individuals/sectors covered by the agreement:

• Residents: Residents are considered having permanent homes both Contracting States; such person shall be deemed to be a resident only of the Contracting State with which he has closer personal and economic ties.

• Permanent Establishment: it can be anything of the following under double tax treaty, 

  (a) the place of management;

  (b) branch;

  (c) an office;

  (d) a factory;

  (e) a workshop, and

  (f) a mine, oil or gas well, quarry or any other place where natural resources are extracted.

• Immovable Property: Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other Contracting State.

• Business Profit: The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State, unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.

• Sea and Air Transport: Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State. Income includes charter, lease or lease of ships or aircraft, maintenance or rental of containers, etc.

• Associated Enterprise: An enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State

The agreement also encompasses the following categories of the Oman-Russia Taxation

1. Business Profits: The taxation of business profits is covered by the treaty, guaranteeing that the revenue is taxed fairly in both nations.

2. Dividends: The agreement stipulates how dividends would be taxed, protecting stockholders from onerous tax loads in Oman in Russia.

3. Interest: The agreement specifies tax rules for interest income intending to prevent interest from being taxed twice.

4. Intellectual property rights and other types of royalties are protected from double taxation by the treaty's rules on the taxation of royalties.

5. Capital Gains: The agreement also discusses the taxation of capital gains from the sale of immovable property and securities, providing clarification on the tax treatment of such profits in both cases.

6. Income from Employment: In order to prevent the problem of double taxation for those working in Oman and Russia, provisions for the taxation of income from employment are defined in the agreement.

The Double Tax Treaty Agreement's signature demonstrates Oman and Russia's commitment to enhancing their economic ties and fostering bilateral business opportunities. The agreement intends to promote cross-border economic activity and ease commerce between the two countries by giving clarity and predictability on taxes problems.

This initiative is anticipated to boost economic growth, encourage foreign investment, and improve the overall business climate in both Oman and Russia. The conditions of the agreement will not only help people and companies by preventing double taxation, but they will also encourage more collaboration and partnership possibilities across a range of industries.

Oman and Russia are prepared to strengthen their economic links, draw outside investment, and open up new growth and development opportunities in the years to come with the Double Tax Treaty Agreement in place. It is anticipated that as Oman and Russia go through the implementation of the Double Tax Treaty Agreement, it will act as a catalyst for more collaboration in several areas, including trade, investment, and innovation. This framework may be used by both nations to investigate new commercial prospects, strengthen their economic integration, and create long-lasting alliances.

The Double Tax Treaty Agreement highlights Oman and Russia's commitment to adjusting and strengthening their economic frameworks to promote sustainable growth and increase their competitiveness in a constantly shifting global economic environment. Future prospects for expanded economic cooperation and shared prosperity between the two countries look bright with the backing of this agreement.

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