ISLAMABAD: A two member delegation of the Federal Board of Revenue (FBR) has been nominated to participate in a five-day long seminar on ‘Double Taxation Treaties Implementation’ next month in Vienna, Austria.
A well-placed source at FBR told this scribe here on Thursday that international double taxation occurred when two or more states used to impose taxes on the same taxpayer for the same subject matter. “Double taxation arises because states tax not only domestic assets and transactions but also assets and transactions in other states which benefit resident taxpayers, resulting in the overlap of the states’ tax claims” the source added.
“Circumstances Giving Rise to Double Taxation the phenomenon of international juridical double taxation can be generally defined as the imposition of comparable taxes in two (or more) States” the source said adding that bilateral double tax treaties addressed and reduced the extent of this double taxation: efficacy of the treaty approach, however, depended on common and workable interpretations of the treaty terms.
The source said that double taxation was widespread because the vast majority of states, in addition to levying taxes on domestic assets and domestic economic transactions, levied taxes on assets situated and transactions carried out in other countries to the extent that they benefited resident taxpayers.
Moreover the source said that term Double Tax Treaties term had been used to refer to all international as well as domestic tax provisions relating specifically to situations involving the territory of more than one state, or so-called “cross-border situations”
Furthermore the source said that an understanding of double taxation law requires a familiarity with aspects of public international law and with the distinctions between international tax law and private international law and the relationship between the mobilization of financial resources for development and international tax cooperation featured prominently in the outcome documents of major United Nations conferences and summits on economic and social matters over the past decade,
The source added that Chairman FBR Tariq Bajwa had approved the nominations of two officers of grade-19 for the participation in the said seminar. Moreover, the source said that Bajwa had further forwarded nominations to the Finance Ministry for the approval from the Finance Minister.
“Ishaq Dar who is very likely to grant approval today (Friday) or in next one or two days” the source added saying that Bajwa had nominated Additional Commissioner Large Taxpayers’ Unit (LTU) Lahore Muhammad Abid and Secretary Inland Revenue-Policy (IR- Policy) Muhammad Asghar Khan Niazi attend the said seminar.
The seminar is being organized in collaboration with International Finance Corporation (IFC), World Bank (WB), International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).
“Tax officials from fifteen to twenty countries, across the globe are expected to attend the said seminar with a view to share best tax practices followed in their respective countries” the source said adding that such seminars had been a source of learning from each others expertise and experiences.
It is pertinent to note here that tax treaties, and model conventions, generally do not include any guidance on how the provisions of treaties should be applied, leaving this matter to the domestic law of the contracting States as well as there is a vast and growing body of literature, and ample supply of training materials dealing with the substantive provisions of tax treaties and the relationship between them and the provisions of a country’s domestic law, relatively little assistance is available regarding the practical application of tax treaties.
Most commonly, UN and OECD Model Conventions: For purposes of both the United Nations and OECD Model Conventions, it is assumed that any rules for the application of the provisions of those Model Conventions are a matter for the domestic law of the contracting States. Consequently, there are no general rules in the Model Conventions or in the Commentaries on how the provisions of the treaty should be applied. There are, however, a few specific rules with respect to application issues that are discussed briefly in this section.