Pakistan And Switzerland Sign New Double Tax Treaty

by Mary Swire, Tax-News.com, Hong Kong

25 November 2008

It has been announced that Pakistan and the Swiss Confederation have signed an updated treaty for the avoidance of double taxation which sets new withholding tax rates for dividend, interest and royalty income.

Tax officials from both countries met in Islamabad on November 24, where they exchanged the necessary Instrument of Intent to bring the Agreement into force. The two parties were led by the Swiss Ambassador to Pakistan, Mr Markus Peter and Mr Ahmad Waqar, Secretary of the Revenue Division and Chairman of the Federal Board of Revenue (FBR), from Pakistan.

According to the revised Agreement, companies with a 20% participation in dividends will be taxed at 10%, with all other cases to be taxed at 20% in the source country. The withholding tax rate on interest, royalties and fees for technical services will be 10%. Students with an income of CHF18,000 or less will be exempt from paying tax on their earnings.

Waqar hailed the revised Agreement as a necessary step towards providing safeguards against double taxation on the income of the residents of both countries as well as promoting economic co-operation, investment and bilateral economic relations.

The Swiss Ambassador also expressed his hope that the new convention would be a significant step in improving the bilateral taxation relations between the two countries.

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