The Central Board of Revenue (CBR) has conveyed to British tax officials that the United Kingdom (UK) is not authorised to tax the income of Pakistani cricket team members under the convention of avoidance of double taxation and fiscal evasion.
Sources told Business Recorder on Tuesday that the Board had informed UK Revenue and Customs department that the concerned department had wrongly interpreted the convention.
The British tax officials have taxed the team under Article 18 of the agreement for avoidance of double taxation inked between Pakistan and UK, which according to CBR is wrong.
Meanwhile, a leading tax expert said that this is the first ever tax-related international dispute, which emerged between the tax departments of two countries. Since the promulgation of the convention of the avoidance of double taxation between Pakistan and UK in 1980s, no such tax-related dispute had been witnessed in the past.
He said that the recent amendment in the Income Tax Rules 2002 through SRO (714)2006 has elaborated the procedure for the settlement of tax matters raised by foreign tax officials against Pakistani citizens.
The Pakistan Cricket Board (PCB) has also informed CBR that proper interpretation of the convention was needed for equal exemption to the players of both sides. Pakistan had not imposed any tax on the English cricket team during its last tour of Pakistan under the convention of the avoidance of double taxation between the two countries.
The PCB said that the UK revenue and customs had suddenly changed its stance, which is not only against the past practice, but also against the article 18 of the convention agreed by the two countries.
The PCB pointed out that the UK is categorising the individual players as athletes. But, the cricketers do not fall in category of athletes. Under article 18 of the avoidance of double taxation agreement, the expression agreed upon is athletes. It is not applicable to the income of cricketers which is not covered by this article, sources added.
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