Pakistan has enforced from June 7, 2017 amended convention, having provisions on exchange of information, under convention on Avoidance of Double Taxation and the Prevention of Fiscal Evasion signed with Republic of Belarus. According to the S.R.O. 709(1)/2017 issued by the Federal Board of Revenue FBR here on Saturday, whereas Pakistan and Belarus signed the Protocol to amend the existing Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income between Pakistan and Belarus signed on July 23, 2004.
Under Article 5 of the Protocol, the Contracting States (Pakistan and Belarus shall notify each other through diplomatic channels that all the legal procedures for the entry into force of this Protocol have been completed. Both the contracting states have completed all the legal procedures required for the entry into force this Protocol, the FBR said.
The said Protocol shall come into force from 7th June, 2017 and the provisions of the said Protocol shall apply. In Pakistan, with regard to others taxes in respect of any taxable year beginning on or after the 1st day of July next following the date upon which the Protocol enters into force. In Belarus, pertaining to the other taxes, for taxes chargeable for any tax period beginning on of after 1st January in the calendar year next following the year in which the Convention enters into force. Under the article of Shipping and Air Transport, the profits from the operation of aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
Profits from the operation of ships in international traffic may be taxed in the Contracting State in which the effective management of the enterprise is situated. However, such profits derived from sources within the other Contracting State may also be taxed in that other State in accordance with its domestic law, provided that the tax so charged in that other State shall be reduced by 50 per cent.
For the purposes of this Article, profits from the operation of ships or aircraft III international traffic include profits from the rental on a bareboat basis of ships or aircraft; and profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise; where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.
If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or boat then it shall be deemed to be situated in the Contracting State in which the harbor of the ship or boat is situated, or if there is no such home harbor, in the Contracting State of which the operator of the ship or boat is a resident.
The relevant provisions shall also apply to profits from the participation in a pool, a joint business or an international operating agency, but only to so much of the profits so derived as is attributable to the participant in proportion to its share in the joint operation."
Under Article 25 (exchange of information), the competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Convention.
Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorizes such use.
If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the specified limitations, but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
In no case shall the provisions be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. The Contracting States shall notify each other through diplomatic channels that all legal procedures for the entry into force of this Protocol have been completed.
The provisions of this Protocol shall apply in Pakistan with regard to others taxes in respect of any taxable year beginning on or after the 1st day of July next following the date upon which the Protocol enters into force and in Belarus, in respect of other taxes, for taxes chargeable for any tax period beginning on of after 1st January in the calendar year next following the year in which the Convention enters into force. The provisions of the Protocol shall form an integral part of the Convention for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on income signed on July 23, 2004.