Pakistan and Hong Kong SAR,
today have ratified the Avoidance of Double Taxation and Prevention of Fiscal
Evasion with Respect to Taxes on Income. The Agreement was signed on February
17, 2017 after negotiations spreading over six years. The tax pact will come
into force from November 24, 2017, says a press release received here today from
Hong Kong.
The tax pact shall benefit
individuals and companies working in Pakistan and Hong Kong SAR by providing
safeguards against paying double taxation on the incomes of the residents of
both jurisdictions. The Agreement will also provide adequate certainty in
respect of taxation rules applicable to cross-border business transactions,
dividends, interest and royalties etc.
Under
the agreement, double taxation will be avoided in that any Pakistani tax paid by Hong Kong
companies will be allowed as a credit against the tax payable in Hong Kong on the same
profits,
subject to the provisions of the tax laws of Hong Kong. Likewise, for Pakistani companies, the tax they paid in Hong Kong
will be allowed as a deduction from the tax payable on the same income
in Pakistan.
On this occasion,
Pakistan’s Consul General for Hong Kong Mr. Abdul Qadir Memon has said that
this was a great milestone to sign the Agreement with Hong Kong, the world’s
freest economy. He hoped that the Agreement would promote economic cooperation,
investment and would strengthen the existing bilateral economic relations
between Pakistan and Hong Kong.
He said that the
Agreement sets
out clearly the allocation of taxing rights between the two jurisdictions,
which would eventually help investors, better assess their potential tax
liabilities from cross-border economic activities.
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