The Federal Board of Revenue (FBR) has notified agreement on the Avoidance of Double Taxation and Prevention of Fiscal Evasion between Pakistan and Morocco. In this regard, the FBR has issued SRO 940(I)/2009, here on Thursday to implement the convention in both the countries.
Pakistan and Morocco had ratified the agreement for the "Avoidance of Double Taxation and Prevention of Fiscal Evasion" which was signed between the two countries in May 2006 in Rabat, Morocco with an aim to promote bilateral trade and commerce. The ceremony for exchange of instrument of ratification was held at FBR house here on Thursday where the Ambassador of Morocco to Pakistan, Mohammad Rida El-Fassi and Chairman Federal Board of Revenue, Sohail Ahmad represented their respective countries.
According to the document, double taxation of income tax has been eliminated between the two states to promote inter-state trade and commerce. It also laid down principle for taxation of all sources of income.
The agreement has settled the principle for determination of residential status of individuals and corporate entities besides exempting tax from the funds received by students for the purpose of education. The agreement comprehensively provides for co-operation in all important areas of international taxation including exchange of information.
Sources said that the convention would not only provide safeguards against double taxation on the income of the residents of both the countries but would also promote economic co-operation, investment and would further strengthen the existing economic relations between the two countries.
The agreement would create a conducive atmosphere for trading and investment in the two countries by ensuring certainty of tax treatment. On the occasion, Moroccan Ambassador expressed the hope that the new agreement would be significant step in improving economic relations between the two brotherly countries.
Under Article-7 (Business Profits) of the convention, the profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.