Canada–Oman Tax Agreement Act, 2004 (S.C. 2005, c. 8, s. 5)

PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE SULTANATE OF OMAN FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

On signing of the Agreement between the Government of Canada 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 on Capital (hereinafter referred to as the “Agreement”), the undersigned have agreed upon the following provisions:

• 1 With reference to subparagraph j) of paragraph 1 of Article 3 of the Agreement, it is understood that the term “tax” shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which the Agreement applies or which represents a penalty imposed relating to those taxes.

• 2 With reference to paragraphs 1 and 2 of Article 7 of the Agreement, it is understood that where an enterprise of a Contracting State sells goods or merchandise or otherwise carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall be determined only on the basis of the profits that are attributable to the actual activity of the permanent establishment for such business. Without limiting the foregoing, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits of the enterprise attributable to such permanent establishment shall be determined only on the basis of that part of the contract that is effectively carried out by the permanent establishment in the State where the permanent establishment is situated. Any other profits related to that part of the contract that is carried out by the enterprise outside that State shall be taxable only in the State of which the enterprise is resident.

• 3 With reference to Articles 8 and 14 of the Agreement, it is agreed that in the event of a Canadian air transport enterprise being subjected to any tax similar to those mentioned in Article 2 with respect to profits referred to in Article 8, by any other State which is a shareholder in Gulf Air Company, the provisions of paragraphs 1, 3 and 4 of Article 8 and paragraph 3 of Article 14 shall apply only, with respect to profits and gains derived by Gulf Air Company, which are attributable under its constitutive contract to the Government of the Sultanate of Oman.

• 4 It is agreed that in the event that, pursuant to an income tax convention or agreement concluded by Canada after the date of the signature of the Agreement, Canada agrees to a lower rate of withholding tax on interest than that provided in paragraph 2 of Article 11 of the Agreement, the appropriate authorities of Canada shall consult within a reasonable period of time with the appropriate authorities of the Sultanate of Oman regarding a further reduction in the rate of withholding tax on interest.

• 5 With reference to paragraphs 4 and 5 of Article 28 of the Agreement, it is agreed that nothing in the provisions of those paragraphs shall be construed as preventing a Contracting State from granting the benefits provided by its legislation relating to tax-free zones.

• 6 It is agreed that nothing in the Agreement shall be construed as preventing Canada from imposing on the earnings of a company attributable to a permanent establishment in Canada, or the earnings attributable to the alienation of immovable property situated in Canada by a company carrying on a trade or business in immovable property, a tax in addition to the tax that would be chargeable on the earnings of a company that is a national of Canada, except that any additional tax so imposed shall not exceed five per cent of the amount of such earnings that have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term “earnings” means the earnings attributable to the alienation of such immovable property situated in Canada as may be taxed by Canada under the provisions of Article 6 or paragraph 1 of Article 14 of the Agreement, and the profits, including any gains attributable to a permanent establishment in Canada in a year and previous years, after deducting therefrom all taxes, other than the additional tax referred to herein, imposed on such profits in Canada.

IN WITNESS WHEREOF, the undersigned, duly authorised to that effect, by their respective Governments, have signed this Agreement.

DONE at Muscat, on this 30th day of June 2004, corresponding to 12/05/1425 AH, in two identical originals each in the English, French and Arabic languages, all texts being equally authoritative.

FOR THE GOVERNMENT OF CANADA

FOR THE GOVERNMENT OF THE SULTANATE OF OMAN