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Switzerland-Pakistan DTA Enters Into Force

by Ulrika Lomas, Tax-News.com, Brussels

07 December 2018


A new double taxation agreement (DTA) between Switzerland and Pakistan entered into force on November 29.

The new DTA replaces the existing agreement between the two countries. Its provisions will apply from January 1, 2019. The agreement was signed in March 2017.

The Swiss Federal Council said that the DTA improves upon the previous agreement with regard to the taxation of service charges and profits resulting from the sale of significant interests.

Under the DTA, withholding taxes on dividends will generally be capped at 20 percent. A 10 percent rate will apply if the recipient oft he dividends is a company that owns at least 20 percent of the company paying the dividends. The DTA caps the withholding tax rate for both interest and royalties income at 10 percent.

The agreement also contains an arbitration clause, to guarantee the avoidance of double taxation. Its provisions on the exchange of information are in line with the international standard and its anti-abuse provision meets the minimum standard recommended by the OECD in its base erosion and profit shifting (BEPS) project.

TAGS: Pakistan | tax | business | double tax agreement (DTA) | interest | royalties | Organisation for Economic Co-operation and Development (OECD) | agreements | tax rates | withholding tax | Switzerland | dividends | BEPS

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