ARTICLE 10

Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.

(2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 percent of the gross amount of the dividends.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

(3) The term "dividends" as used in this Article means income from shares, "jouissance" shares, or "jouissance" rights, founders' shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

(4) Notwithstanding the provisions of paragraph 2, dividends paid by a company being a resident of the Sultanate of Oman to the Islamic Republic of Iran including: Governmental institutions, Governmental companies, Central Bank or other banks wholly owned by the Government of the Islamic Republic of Iran, shall be exempt from tax in the Sultanate of Oman.

(5) Notwithstanding the provisions of paragraph 2, dividends paid by a company being a resident of the Islamic Republic of Iran to the Government of the Sultanate of Oman shall be exempt from tax in the Islamic Republic of Iran. For the purposes of this Article, the term "Government" shall include:

• (i) the Central Bank of Oman;
• (ii) the State General Reserve Fund;
• (iii) the Omani Development bank; and
• (iv) any other statutory body or institution wholly or mainly owned by the Government of the Sultanate of Oman.

(6) The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

(7) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Contracting State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State.