Pakistan, Germany to revise deal for avoiding double taxation

Pakistan, Germany to revise deal for avoiding double taxation

ISLAMABAD:

Tax officials of Pakistan and Germany met recently to re-negotiate the bilateral agreement on avoidance of double taxation.

The agreement needs to be revised to cater to the changing tax rules and regulations as per international and domestic requirements. The first draft of the agreement was initiated by the respective heads of delegation on September 22, 2023 after detailed consultations and mutual agreement on key articles of the draft deal.

The Federal Board of Revenue (FBR) initiated the re-negotiations on the agreement for eliminating double taxation with respect to taxes on income and the prevention of tax evasion and avoidance.

In this connection, the tax delegations of both countries met for the first round of negotiations from September 18-22, 2023, according to a statement.

The existing agreement for the avoidance of double taxation between Pakistan and Germany had been signed in 1994.

The revised agreement, once finalised, will not only strengthen the existing safeguards against double taxation on the income of residents of both countries without creating opportunities for non-taxation or reduced taxation through abusive arrangements.

It will also promote economic cooperation, strengthen the bilateral economic relations and enhance investments in both countries while ensuring adequate certainty in respect of taxation rules applicable to cross-border business transactions.

Under the agreement, the taxpayers of both sides will get relief from double taxation, resulting in a boost to trade activities. Earlier, Pakistan and Germany agreed to enhance bilateral cooperation in multiple fields including trade, investment and energy.

The bilateral ties were discussed in a meeting between former prime minister Shehbaz Sharif and German Chancellor Olaf Scholz on the sidelines of the New Global Financing Pact Summit.

Published in The Express Tribune, September 27th2023.

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