Oman-Japan pact to avoid double taxation takes effect on Sept. 1

MUSCAT The agreement to avoid double taxation and prevent tax evasion between Oman and Japan is to come into effect from September 1. Japan’s official gazette has announced the agreement between the Government of Japan and the Government of the Sultanate of Oman for the ‘Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income’ and the notification was sent from Japan through diplomatic channels on the completion of Japan’s internal procedures for the entry into force of the agreement on August 17, according to a Japanese embassy statement.

The agreement was signed on January 9, 2014, ahead of Japanese Prime Minister Shinzo Abe’s official visit to Oman.

The agreement adjusts the taxation rights between Japan and Oman to avoid international double taxation arising from economic and human exchanges. Reflecting the strengthened economic relations between the two countries, and to promote mutual investment, this agreement clarifies the limit of withholding tax rates imposed by the source state on dividends, interest and royalties. 

Key points of the agreement include the clarification of taxable scope in the source country on business profit resulting from the business activities of enterprises, reduction of taxation on investment income in the source country to 5 per cent dividends (10 per cent shareholding requirement) and 10 per cent others, interest exemption for the government and 10 per cent royalties. There is a framework for ensuring smooth dispute resolution on tax matters between the tax authorities of the countries with provisions to implement the exchange of information regarding tax matters between tax authorities.