PESHAWAR: Through S.R.O 603 (1) 2017, it has been notified by the Federal Board of Revenue that the Governments of Pakistan and Ireland have signed the Convention for the Avoidance of Double Taxation and Prevention of Fiscal Evasion on offshore business.
The sources at the FBR Peshawar informed the Customs Today on Tuesday that for bringing the convention into force both contracting states shall notify the other one about the procedure required by laws to increase trade in the contracting country.
In exercise of the powers conferred by sub-section (1) of section 107 of the Income Tax Ordinance,2001(XLIX of 2001) and the Convention which has come into force on 11th October 2016, amendments were added regarding the changing international trade policies in June 2017.
Sources said that dealings with regard to the income tax, universal social charge and capital gain tax for any year of assessment beginning on or after the first day of January will be bound to the words of convention.
Dealing regarding the corporation tax for any financial year beginning on or after the first date of January in the calendar year next following the date of enforcement of said convention will be bound to prepare tax documents before shifting of business from one country to another.
The income from immovable property or the income derived by a resident of a contracting state from immovable property (including income from agriculture or forestry) situated in the other contracting state may be taxed in that other state.
The profits of an enterprise of a contracting state shall be taxable only in that state unless the enterprise carries on business in the contracting state through a permanent establishment situated therein. In the shift of the business to the other state, the profit of the enterprise may be taxed in other state.
Profits of an enterprise of a contracting state from the operation or rental of ships or aircraft in the international traffic shall be taxable only in that state. If the place of effective management of a shipping enterprise is aboard then it shall be deemed to be situated in the contracting state in which the home harbor of ship is situated.
A person, who is resident of a contracting state which carries on relevant activities carried out on offshore in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in a contracting state, will be liable to pay tax to the state of business.
