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Tax Treaty between Oman and the Slovak Republic has Entered into Force — Orbitax Tax News & Alerts

The Slovak Republic published Notice No. 548/2021 on 31 December 2021, providing that the income tax treaty with Oman entered into force on 15 November 2021. The treaty, signed 25 March 2018, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Oman income tax and Slovak tax on income of individuals and tax on income of legal persons.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision whereby taxing rights are granted to a Contracting State on profits attributable to the sale of goods or merchandise by a resident of the other State if the same or similar goods or merchandise are sold through a PE maintained by that resident in the first-mentioned Contracting State. The same applies for other business activities carried on in a Contracting State by a resident of the other State if the same or similar activities are carried on through a PE.

Withholding Tax Rates

  • Dividends – 0%
  • Interest – 10%
  • Royalties – 10%

Limitation on Benefits

The beneficial provisions of Articles 10 (Dividends), 11 (Interest), and 12 (Royalties) will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims, or other rights in respect of which the income is paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of those Articles.

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares of the capital stock of a company, or of an interest in a partnership, trust, or estate, the property of which consists directly or indirectly principally of immovable property situated in the other State ("principally" means the value of such immovable property exceeds 50% of the aggregate value of all assets owned by the company, partnership, or trust).

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Effective Date

The treaty applies from 1 January 2022.