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Pakistan and the Swiss Confederation have signed a treaty for the avoidance of double taxation previously payable on the income of residents and businessmen of the countries. Tax officials of both the countries Monday met here in Islamabad to exchange the necessary Instrument of Intent to bring into force the revised Convention for Avoidance of Double Taxation. The two sides were led by Swiss Ambassador to Pakistan, Mr. Markus Peter, from the Swiss Confederation and
Mr. Ahmad Waqar, Secretary Revenue Division and Chairman FBR, from Pakistan.
Addressing a ceremony held at the FBR Headquarters for the exchange of Instrument of Intent, Mr. Irfan Nadeem, Member Direct Taxes FBR, welcomed the Swiss ambassador and explained the main features of the revised Convention.
According to the revised Convention, dividend in case of companies having 20 per cent share will be taxed at 10 per cent, and all other cases will be taxed at 20 per cent in the source country. Similarly, interest income may also be taxed in the contracting state in which it arises at 10 per cent of the gross amount.
The Convention further stipulates royalty in the source country to be taxed at 10 per cent; fee for technical services to be taxable at 10 per cent in the source country; and grant of exemption to students on remuneration from the employment which does not exceed 18,000 Swiss francs or the equivalent thereof in Pakistan currency at the official rate of exchange.
Speaking on the occasion, Mr. Ahmad Waqar, Secretary Revenue Division, hailed the revised Convention as the necessary step towards providing safeguards against double taxation on the income of the residents of both the countries as well as promoting economic cooperation, investment and bilateral economic relations between the contracting States.
He said the Convention will also provide adequate certainty in respect of taxation rules applicable to cross-border business transactions, dividends, interests, royalties and fee for technical services etc. Taxpayers of both the countries will get relief from double taxation resulting in boosting up the trading activities.
Swiss Ambassador Mr. Markus Peter thanked FBR officials for the warm welcome and expressed hope that the new Convention will be a significant step in improving the bilateral taxation relations between the two countries.
