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Bangladesh
GOVERNMENT OF PAKISTAN
MINISTRY OF FINANCE AND ECONOMIC COORDINATION
(Finance Division)
NOTIFICATION
Islamabad, the 8th July, 1987
S.R.O. 586(1)/87. - Whereas the annexed Convention between the
Government of the Islamic Republic of Pakistan and the Government of the People's Republic
of Bangladesh for avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income has been made;
Now, THEREFORE, in exercise of the powers conferred by section 163 of the Income Tax
Ordinance, 1979 (XXXI of 1979), the Federal Government is pleased to direct that the
provisions of the said Convention shall enter into force on the sixth day of April, 1987,
and shall have effect as respects-income arising or accruing in either of the Contracting
States on or after the first day of January, 1980.
Annex
CONVENTION BETWEEN THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF PAKISTAN AND THE GOVERNMENT
OF THE PEOPLES REPUBLIC OF BANGLADESH FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF PAKISTAN
AND
THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF BANGLADESH DESIRING TO CONCLUDE A CONVENTION
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO
TAXES ON INCOME HAVE AGREED AS FOLLOWS:-
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE I
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
(1) This Convention shall apply to taxes on income imposed on
behalf of a Contracting State or of its political sub-divisions or local authorities,
irrespective of the manner in which they are levied.
(2) There shall be regarded as taxes on income all taxes imposed on total income or on
elements of income including taxes on gains from the alienation of movable or immovable
property and taxes on the total amounts of wages or salaries paid by enterprises.
(3) The existing taxes to which the Convention shall apply are:-
(a) in the case of the People's Republic of Bangladesh:
(i) the income tax; and
(ii) the super tax and surcharges; (hereinafter referred to as "Bangladesh
(b) in the case of the Islamic Republic of Pakistan:
(i) the income tax; and
(ii) the super tax and surcharges; (hereinafter referred to as "Pakistan tax").
(4) The Convention shall apply also to any identical or substantially similar taxes which
are imposed after the date of signature of the Convention in addition to, or in place of,
the existing taxes by either Contracting State or by the Government of any territory to
which the Convention is extended under Article 28 of the Convention. The competent
authorities of the Contracting States shall notify each other of changes which have been
made in their respective taxation laws.
CHAPTER II
DEFINITIONS
ARTICLE 3
GENERAL DEFINITIONS
(1) In this Convention, unless the context otherwise requires:
(a) the term "Bangladesh" means the People's Republic of Bangladesh and when
used in a geographical sense, the territory in which the Constitution of the People's
Republic of Bangladesh is in force, as well as any area adjacent to the territorial waters
of Bangladesh specified to be the Continental Shelf and Economic Zone of Bangladesh under
any law made in pursuance of Article 143 of the Constitution;
(b) the term "Pakistan" used in a geographical sense means Pakistan as defined
in the Constitution of the Islamic Republic of Pakistan and also includes any area outside
the territorial waters of Pakistan which under the laws of Pakistan is an area within
which the right of Pakistan with respect to the sea bed and sub-soil and their natural
resources may be exercised;
(c)the terms "a Contracting State" and "the other Contracting State"
mean Bangladesh and Pakistan as the context requires;
(d) the term "person" includes an individual, a company and any other entity or
body of persons;
(e) the term "company" means any body corporate or any entity which is treated
as a body corporate for tax purposes;
(f) the terms "enterprise of a Contracting State" and "enterprise of the
other Contracting State" mean respectively an enterprise carried on by a resident of
a Contracting State enterprise carried on by a resident of the other Contracting State.
(g) the term "national" means:
(i) any individual possessing the nationality of a Contracting State;
(ii) any legal person, Partnership and association deriving their status as such from the
law in force in a Contracting State;
(b) the term "international traffic" means any transport by ship or aircraft
operated by an enterprise of a Contracting State except when such ship or aircraft is
operated solely between places in the other Contracting State;
(i) the term "competent authority" means:
(i) in Bangladesh, the National Board of Revenue or the authorised representative; and
(ii) In Pakistan, the Central Board of Revenue.
(2) As regards the application of the Convention by a Contracting State, any term not
defined shall, unless the context otherwise requires, have the meaning which it has under
the laws of that Contracting State concerning the taxes to which the Convention applies.
ARTICLE 4
RESIDENT
(1) For the purposes of this Convention, the term "resident
of a Contracting State" means any person who, under the laws of that State, is liable
to tax therein by reasons of his domicile, residence, place of management or any other
criterion of a similar nature. But this term does not include any person who is liable to
tax in that State in respect only of income from sources in that State.
(2) Where by reason of the provisions of paragraph (1) an individual is a resident of both
Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the State in which he has a permanent home
available to him; if he has a permanent home available to him in both States, he shall be
deemed to be a resident of the State with which his personal and economic relations are
closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if
he has not a permanent home available to him in either State, he shall be deemed to be a
resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed
to be a resident of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of
the Contracting States shall settle the question by mutual agreement.
(3) Where by reason of the provisions of paragraph (1) a person other than an individual
is a resident of both contracting States, then it shall be deemed to be a resident of the
State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
(1) For the purposes of this Convention, the term "permanent
establishment" means a fixed place of business in which the business of the
enterprise is wholly or partly carried on.
(2) The term "permanent establishment" shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a warehouse;
(g)a mine, an oil or gas well, a quarry or any other place of extraction of natural
resources;
(h)a building site or construction or assembly project or the like which exists for more
than 183 days.
(3) Notwithstanding the provisions of the preceding paragraph the term "permanent
establishment" shall be deemed not to include:
(a)the use of facilities solely for the purpose of storage or display of goods or
merchandise belonging to the enterprise;
(b)the maintenance of a stock of goods or merchandise belonging to the enterprise solely
for the purpose of storage or display;
(c)the maintenance of a stock of goods or merchandise belonging to the enterprise solely
for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise or of collecting information for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of advertising,
for the supply of information for scientific research or for similar activities which have
a preparatory or auxiliary character, for the enterprise.
(4) Notwithstanding the provisions of paragraphs (1) and (2) an enterprise of a
Contracting State shall be deemed to have a permanent establishment in the other
Contracting State if it has in that other State an agent - other than an agent to whom
paragraph (5) applies - who
(a) has and habitually exercise, a general authority to negotiate and conclude contracts
for or on behalf of the enterprise, unless the activities of the agent are limited to the
purchase of goods or merchandise for the enterprise; or
(b) he has no such authority, but habitually maintains in the first mentioned State a
stock of goods or merchandise belonging to the enterprise from which he regularly fills
orders or makes deliveries on behalf of the enterprise and additional activities conducted
in the State on behalf of the enterprise have contributed to the conclusion of the sale of
such goods or merchandise.
(5) An enterprise shall not be deemed to have a permanent establishment in a Contracting
State merely because it carries on business in that State through a broker, general
commission agent or any other agent of an independent status provided that such persons
are acting in the ordinary course of their business.
(6) The fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or which
carries on business in that other State (whether through a permanent establishment or
otherwise), shall not of itself make either company a permanent establishment of the
other.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
(1) Income derived by a resident of a Contracting State from
immovable property situated in the other Contracting State may be taxed in that other
State.
(2) The term "immovable property" shall have the meaning which it has under the
law of the Contracting State in-which the property in question is situated. The term shall
in any case include property accessory to immovable property, livestock and equipment used
in agriculture, forestry and fishery, rights to which the provisions of general law
respecting landed property apply, usufruct of immovable property and rights to variable or
fixed payments as consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources; ships, boats and aircraft shall not be
regarded as immovable property.
(3) The provisions of paragraph (1) shall apply to income derived from the direct use
letting, or use in any other form of immovable property.
(4) The provisions of paragraphs (1) and (3) shall also apply to the income from immovable
property of an enterprise and to income from immovable property used for the performance
of independent personal services.
ARTICLE 7
BUSINESS PROFITS
(1) 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. If the enterprise
carries on business as aforesaid, the profit of the enterprise may be taxed in the other
State but only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of paragraph (3), where an enterprise of a Contracting State
carries on business in the other Contracting State through a permanent establishment
situated herein, there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or similar
conditions and dealing wholly independently with the enterprise of which it is a permanent
establishment.
(3) In determining the profits of a permanent establishment, there shall be allowed as
deductions expenses which are incurred for the purpose of the permanent establishment
including executive and general administrative expenses so incurred whether in the State
in which the permanent establishment is situated or elsewhere as are admissible under the
laws of that State.
(4) Insofar as it has been customary in a Contracting State to determine the profits to be
attributed to a permanent establishment on the basis of an apportionment of the total
profits of the enterprise to its various parts, nothing in paragraph (2) shall preclude
the Contracting State from determining the profits to be taxed by such apportionment as
may be customary; the method of apportionment adopted shall, however, be such that the
result shall be in accordance with the principle laid down, in this Article.
(5) No profits shall be attributed to a permanent establishment by reason of the mere
purchase by that permanent establishment of goods or merchandise for the enterprise.
(6) For the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless there
is good and sufficient reasons to the contrary.
(7) Where profits include items of income which are dealt with separately in other
Articles of this Convention then the provisions of those Articles shall not be affected by
the provisions of this Article.
ARTICLE 8
AIR TRANSPORT
(1) Profits derived by an enterprise of a Contracting State from
the operation of aircraft in international traffic shall be taxable in that Contracting
State.
(2) The provisions of paragraph (1) shall also apply to profits from the participation in
a pool, joint business or an international operating agency.
(3) For the purposes of this Article, profits from the operation of aircraft also include
income derived from:
(a) the rental, lease or maintenance of aircraft.
(b) training scheme, management and other services rendered by an air transport enterprise
of one Contracting State to the air transport enterprise of the other Contracting State:
Provided that such income accrues to an enterprise of a Contracting State whose income is
wholly or mainly derived from the operation of aircraft in international traffic.
ARTICLE 9
SHIPPING
(1) Income of an enterprise of a Contracting State derived from
the other Contracting State from the operation of ships in international traffic may be
taxed in that other Contracting State, but the tax chargeable in that other Contracting
State on such income shall be reduced by an amount equal to fifty per cent of such tax.
(2) For the purposes of paragraph (1) of this Article, income derived of an enterprise of
a Contracting State from the operation of ships from the other Contracting State shall
mean income from the carriage of passengers, all, livestock or goods shipped in that other
Contracting State.
(3) The provisions of paragraph (1) of this Article shall likewise apply in respect of
participation in pools of any kind by an enterprise of either Contracting State engaged in
shipping
ARTICLE 10
ASSOCIATED ENTERPRISES
Where -
(a) an enterprise of a Contracting State participates directly or indirectly in the
management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or
capital of an enterprise of a Contracting State and an enterprise of the other Contracting
State,
and in either case, conditions are made or imposed between the two enterprises, in their
commercial or financial relations, which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reason of those conditions, have not so
accrued, may be included in the profits of that enterprise and taxed accordingly.
ARTICLE 11
DIVIDENDS
(l) Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State may be taxed in that other
state.
(2) However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that State, but if
the recipient is the beneficial owner of the dividends the tax so charged shall not exceed
15 per cent of the gross amount of such dividends. The provisions of this Article shall
not affect the taxation of the company in respect of the profits out of which the
dividends are paid.
(3) The term "dividends" as used in this article means income from shares or
other rights, not being debt-claims, participating in profits, as well as income from
other corporate rights assimilated to income from shares by the taxation law of the State
in which the company making the distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the recipient of the
dividends, being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident, through a
permanent establishment situated therein, or performs in that other State professional
services from a fixed base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent therein, and the holding
in respect of establishment or fixed base. In such a case, the provisions of Article 7 or
Article 15, as the case may be, shall apply.
(5) Where a company which is a resident of a Contracting State, derives profits or income
from the other Contracting State, that other Contracting State may not impose any tax on
the dividends paid by the company, except in so far as such dividends are paid to a
resident of that other State or insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax on the
company's undistributed profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other state.
ARTICLE 12
INTEREST
(1) Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
(2) However, such interest may be taxed in the Contracting State in which it arises, and
according to the law of that State; but if a resident of the other Contracting State is
the beneficial owner of the interest, the tax so charged shall not exceed 15 per cent of
the gross amount of the interest,
(3) Notwithstanding the provisions of paragraph (2):
(a) the State Bank of Pakistan shall be exempt from Bangladesh tax with respect to
interest from sources within Bangladesh;
(b)the Bangladesh Bank shall be exempt from Pakistan tax with respect to interest from
sources within Pakistan;
(c) the Government of a Contracting State shall be exempt from the tax of the other
Contracting State with respect to interest on loans derived by that Government from
sources within that other Contracting State;
(d) any financial institution, other than a scheduled bank, owned or controlled by the
Government of a Contracting State shall be exempt from the tax of the other Contracting
State with respect to interest on loans derived by that institution from sources within
that other Contracting State.
(4) The term "interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage, and whether or not carrying a right to
participate in the debtor's profits, and in particular, income from Government securities
and income from bonds or debentures, including premiums and prizes attaching to such
securities, bonds or debentures, as well as income assimilated to income from money lent
by the taxation law of the State in which the income arises. However, the term
"interest" does not include for the purposes of this Article penalty charges for
late payments nor income dealt with in Article 11.
(5) The provisions of paragraphs (l) and (2) shall not apply if the recipient of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises through a permanent establishment situated
therein, or performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid is
effectively connected with such permanent establishment or fixed base. In such case, the
provisions of Article 7 or Article 15, as the case may be shall apply.
(6) Interest shall be deemed to arise in a Contracting State when the payer is that State
itself, a political sub-division, a local authority or a resident of that State. Where,
however, the person paying the interest whether he is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment or a fixed base in connection
with which the indebtedness on which the interest is paid was incurred, and that interest
is borne by that permanent establishment or fixed base, then such interest shall be deemed
to arise in the Contracting State in which the permanent establishment or fixed base is
situated.
(7) Where, owing to a special relationship between the payer and the recipient or between
both of them and some other person, the amount of the interest paid, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been agreed upon by
the payer and the recipient in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In that case, the excess part of
the payments shall remain taxable according to the law of each Contracting State, due
regard being had to the other provisions of the Convention.
ARTICLE 13
ROYALTIES
(1) Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
(2) However, such royalties may also be taxed in the Contracting State in which they
arise, and according to the laws of that State, but if the beneficial owner of the
royalties is a resident of the other Contracting State, the tax so charged shall not
exceed 15 per cent of the gross amount of the royalties as defined in paragraph (3).
(3) The term "royalties" as used in this Article means:
(a) payments of any kind received as a consideration for the use oŁ or the right to use,
any copyright, patent, trade-mark, design or model, plan, secret formula or process, or
for the use of, or the right to use, industrial, commercial or scientific equipment and
includes payments of any kind in respect of motion picture films and films or tapes for
radio-broadcasting or television, copyright royalties and other like payments in respect
of the production or reproduction of any literary, dramatic, musical or artistic work;
(b) payments received as consideration for technical know-how or
information concerning industrial, commercial or scientific experience.
(4) The provisions of paragraphs (1) and (2) shall not apply if the recipient of the
royalties arising in the other State, being a resident of a Contracting State, carries on
business in the other Contracting State in which the royalties arise through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the right or property in respect of which
the royalties are paid is effectively connected with such permanent establishment or fixed
base. In such case, the provisions of Article 7 or Article 15 as the case may be, shall
apply.
(5) Royalties shall be deemed to arise in a Contracting State when the payer is that State
itself a political sub-division, a local authority or a resident of that State. Where,
however, the person paying the royalties, whether he is a resident of a Contracting state
or not, has in a Contacting State a permanent establishment or fixed base in connection
with which the obligation to pay the royalties was incurred and those royalties are borne
by that permanent establishment or fixed base, then such royalties shall be deemed to
arise in the Contacting State in which the permanent establishment or fixed base is
situated.
(6) Where, by reason of a special relationship between the payer and the recipient or
between both of them and some other person, the amount of the royalties, having regard to
the use, right or information for which they are paid, exceeds the amount which would have
been agreed upon by the payer and the recipient in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In such a case,
the excess part of the payments shall remain taxable according to the law of each
Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 14
CAPITAL GAINS
(1) Gains derived by a resident of a Contracting State from the
alienation of immovable property, as defined in Article 6, or from the alienation of
shares in a company the assets of which consists principally of such property, may be
taxed in the Contracting State in which such property is situated.
(2) Gains from the alienation of movable property forming part of the business property of
a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available to a
resident of a Contracting State in the other Contracting State for the purpose of
performing independent personal services including such gains from the alienation of such
a permanent establishment (alone or together with the whole enterprise) or of such a fixed
base, may be taxed in that other State.
(3) Notwithstanding the provision of paragraph (2) of this Article, gains derived by a
resident of a Contracting State from the alienation of ships and aircraft operated in
international traffic and movable property pertaining to the operation of such ships and
aircraft shall be taxable only in that Contracting State.
(4) Gains from the alienation of any property other than those mentioned in paragraphs
(1), (2) and (3) of this Article shall be taxable only in the Contracting State of which
the alienator is a resident.
ARTICLE 15
INDEPENDENT PERSONAL SERVICES
(1) Income derived by a resident of a Contracting State in
respect of professional services or other independent activities of a similar character
shall be taxable only in that State. However, in the following circumstances, such income
may be taxed in the other Contracting State and if:
(a) If he has a fixed base regularly available to him in the other Contracting State for
the purposes of performing his activities, in that case, only so much of the income as is
attributable to that fixed base may be taxed in that other Contracting State, or
(b) If he is present in the other Contracting State for a period or periods amounting to
or exceeding in the aggregate 120 days in any fiscal year.
(2) The term "professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the independent
activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 16
DEPENDENT PERSONAL SERVICES
(1) Subject to the provisions of Articles 17, 19 and 20 salaries,
wages and other similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that State unless; the employment is
exercised in the Contracting State. If the employment so exercised, such remuneration as
is derived therefrom shall be taxable in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of
a Contracting State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in
the aggregate 183 days in the fiscal year concerned, and
(b) the remuneration is paid by, or on behalf of an employer who is not a resident of the
other State, and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the
employer has in the other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in respect of
an employment exercised aboard a ship or aircraft operated in international traffic, by an
enterprise of a Contracting State shall be taxable in that State.
ARTICLE 17
DIRECTORS FEES
Directors, [*] fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State shall be taxable in that other State.
ARTICLE 18
ARTISTES AND ATHLETES
(1) Notwithstanding the provisions of Articles 15 and 16 income
derived by public entertainers, such as theatre, motion picture, radio or television
artistes, and musicians and by athletes from their personal activities as such shall be
taxable in the Contracting State in which these activities are exercised:
Provided that such income shall not be taxable in the said Contracting State if the visit
of the public entertainers or athletes to that State is within the scope of a cultural or
sports exchange programme agreed to by both the Contracting States.
(2) Where income in respect of personal activities exercised by an entertainer or an [**] athlete in his capacity as such accrues not to the
entertainer or athlete himself but to another person, that income may, notwithstanding the
provisions of Articles 7, 15 and 16, be taxed in the contracting State in which the
activities of the entertainer or athlete are exercised.
ARTICLE 19
PENSIONS AND ANNUITIES
(1) Subject to the provisions of paragraph (2) of Article 20,
pensions, annuities and other similar remuneration paid to a resident of a Contracting
State in consideration of past employment shall be taxable only in that State.
(2) The term "pension" as used in this Article, means periodic payments made in
consideration for services rendered or by way of compensation for injuries received.
(3) The term "annuity" as used in this Article, means a stated sum payable
periodically at stated times, during life or during a specified or ascertainable period of
time under any obligation to make the payments in return for adequate and full
consideration in money or money's worth.
ARTICLE 20
GOVERNMENT SERVICE
(1) (at Remuneration, other than a pension, paid by a Contracting
State or a political sub-division or a local authority thereof to an individual in respect
of services rendered to that State or sub-division or authority shall be taxable only in
that State.
(b) However, such remuneration shall be taxable only in the other Contracting State if the
services are rendered in that State and the individual is a resident of that State who:-
(i) is a national of that State: or
(ii) did not become a resident of that State solely for the purpose of rendering the
services.
(2)(a) Any pension paid by, or out of funds created by, a Contracting State or a political
sub-division or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the or, her Contracting State if the
individual is a resident of, and a national of, that State.
(3) The provisions of Articles 16, 17 and 19 shall apply to remuneration and pensions in
respect of services rendered in connection with a business carried on by a Contracting
State or a political sub-division or a local authority thereof.
ARTICLE 21
TEACHERS, STUDENTS AND TRAINEES
(1) Remuneration which a professor or teacher who is, or
immediately before was, a resident of a Contracting State and who visits the other
Contracting State for a period not exceeding two years for the purposes of teaching at a
University, College, School or other educational institution receives for such work shall
not be taxed in that other states in respect of that remuneration.
(2) An individual who was a resident of a Contracting State immediately before visiting
the other Contracting State and is temporarily present in that other State solely as a
student at a University, College, School or other similar educational institution in that
other State or as a business or technical apprentice shall, from the date of his first
arrival in that other State in connection with that visit, be exempt from tax in that
other State.
(a) on all remittances from abroad for purposes of his maintenance, education or training;
and
(b) on any remuneration for personal services rendered in that other Contracting State
with a view to supplementing the resources available to him for such purposes for a period
not exceeding five years.
(3) An individual who was a resident of a Contracting State immediately before visiting
the other Contracting State and is temporarily present in that other State solely for the
purpose of study research or training as a recipient of a grant, allowance or award from a
scientific, educational, religious or charitable organisation or under a technical
assistance programme entered into by the Government of a Contracting State shall, from the
date of his first arrival in that other State in connection with that visit, be exempt
from tax in that other State:
(a) on the amount of such grant, allowance or award;
(b) on all remittance from abroad for the, purposes of his maintenance, education or
training; and
(c) on any remuneration for personal services rendered in that other Contracting State
with a view to supplementing the resources available to him for such purposes for a period
not exceeding three years.
ARTICLE 22
INCOME NOT EXPRESSLY MENTIONED
Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that Contracting State, except that if such income is derived from sources within the other Contracting State then it may also be taxed in accordance with the laws of that other State.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
(1) Subject to the provisions of the law of Bangladesh regarding
the allowance as a credit against Bangladesh tax or [*] tax payable
in a territory outside Bangladesh (which shall not affect the general principle hereof),
tax payable under the laws of Pakistan and in accordance with this Convention, whether
directly or by deduction on profits income or chargeable gains from sources within
Pakistan shall be allowed as a credit against any Bangladesh tax computed by reference to
the same profits, income or chargeable gains by reference to which the Pakistan tax is
computed.
(2) Subject to the provisions of the law of Pakistan regarding the allowance as a credit
against Pakistan tax or [*] tax payable in a territory outside
Pakistan (which shall not affect the general principle hereof), tax payable under the laws
of Bangladesh and in accordance with this Convention, whether directly or by deduction, on
profits, income or, chargeable gains from sources within Bangladesh shall be allowed as a
credit against any tax computed by reference to the same profits, income or chargeable
gains by reference to which the Bangladesh tax is computed.
(3) Notwithstanding anything contained in the foregoing paragraphs (1) and (2), where any
profits, income or chargeable gains are not subject to tax or are taxed at a reduced rate
in one of the Contracting States by virtue of any exemption or concession allowed under
the laws of that State or in accordance with this Convention and the same profits, income
or chargeable gains are subject to tax in the other Contracting State, credit shall,
subject to the laws of that State, be allowed in the latter mentioned State for the whole
of the tax, which would have been payable on the said profits, income or chargeable gains
had the same profits, income or chargeable gains not been exempted from tax or had it not
been taxed at a reduced rate in the first-mentioned State.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 24
NON-DISCRIMINATION
(1) Nationals of a Contracting State shall not be subjected in
the other Contracting State to any taxation or any requirement connected therewith, which
is other or more burdensome than the taxation and connected requirements to which
nationals of that other State in the same circumstances are or may be subjected.
(2) The taxation on a permanent establishment which an enterprise of a Contracting State
has in the other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the same
activities in the same circumstances.
(3) Nothing contained in this Article shall be construed as -
(a) obliging a Contacting State to grant to residents of the other Contracting State as
personal allowances, relief and reductions which it grants to its own residents.
(b) affecting any provisions of the tax laws of the respective Contacting States regarding
the imposition of tax on non-resident persons as such; and
(c) affecting as provisions of the tax laws of the respective Contracting States regarding
any tax concessions granted to persons fulfilling specified conditions.
(4) Except where the provisions of Article 9, paragraph (71 of Article 12, or paragraph
(6) of Article 13, apply, interest, royalties and other disbursements paid by an
enterprise of a Contracting State to a resident of the other Contracting State shall, for
the purpose of determining the taxable profits of such enterprise, be deductible under the
same conditions as if they had been paid to a resident of the first-mentioned State. The
provisions of this paragraph shall not affect the application of the national laws of the
Contracting States requiring the deduction of tax at source, from interest, royalties and
other disbursements as a condition for deduction.
(5) Enterprises of a Contracting State, the capital of which is wholly or partly owned or
controlled directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to any taxation or any
requirement connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the first-mentioned State are
or may be subjected
(6) In this Article the term "taxation" means taxes which are the subject of
this Convention.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
(1) Where a person considers that the actions of one or both of
the Contracting States result or will result for him in taxation not in accordance with
the provisions of this Convention, he may, irrespective of the remedies provided by the
domestic laws of those States, present his case to the competent authority of the
Contracting State of which he is a resident or, if his case comes under paragraph (1) of
Article 24, to that of the Contracting State of which he is a national. The case must be
presented within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Convention.
(2) The competent authority shall endeavor, if the objection appears to it to be justified
and if it is not itself able to arrive at a satisfactory solution, to resolve the time
limits case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in accordance with the
Convention. Any agreement reached shall be implemented notwithstanding any in the domestic
laws of the Contracting States.
(3) The competent authorities of the Contracting States shall endeavor to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or
application of the Convention. They may also consult together for the elimination of
double taxation in cases not provided for in the Convention.
(4) The competent authorities of the Contracting States communicate with each other
directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral exchange
of opinions, such exchange may take place through a Commission consisting of
representatives of the competent authorities of the Contracting States.
ARTICLE 26
EXCHANGE OF INFORMATION
(1) The competent authorities of the Contracting States shall
exchange such information as is necessary for carrying out the provisions of this
Convention or of the domestic laws of the Contracting States concerning taxes covered by
the Convention in so far as the taxation thereunder is not contrary to the Convention. The
exchange of information may not be restricted by Article 1. 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) involved in the assessment or
collection of, the enforcement or prosecution in respect of, or the determination of
appeals in relation to, the taxes covered by the Convention. 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.
(2) in no case shall the provisions of paragraph (1) be construed so as to impose on a
Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative
practice of that or of the other Contracting State;
(b)to supply information which is not obtainable under the laws or in the normal course of
the administration of that other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial
or professional secret or trade process or information, the disclosure of which would be
contrary to public policy.
ARTICLE 27
DIPLOMATIC AGENTS AND CONSULAR OFFICIALS
Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.
ARTICLE 28
TERRITORIAL EXTENSION
(1) The Convention may be extended, either in its entirety [*] or with any necessary modifications to any State or territory for
whose international relations either of the Contracting States is responsible and which
impose taxes substantially similar in character to those to which the Convention applies.
Any such extension shall take effect from such date and subject to such modifications, if
any, and conditions including conditions as to termination, as may be specified and agreed
between the Contracting States in notes to be exchanged through diplomatic channels or in
any other manner in accordance with their constitutional procedures.
(2) Unless otherwise agreed by both Contracting States, the denunciation of the Convention
by one of them under Article 30 shall terminate, in the manner provided for in that
Article, the application of the Convention to any State or territory to which it has been
extended under this Article.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 29
ENTRY INTO FORCE
(1) This Convention shall be ratified and the instruments of
ratification shall be exchanged at Islamabad or Dacca as soon as possible.
(2) The Convention shall enter into force upon the exchange of the instruments of
ratification and shall have effect as respects income arising or accruing in either of the
Contracting States on or after the first day of January, 1980.
ARTICLE 30
TERMINATION
This Convention shall remain in effect indefinitely but either
Contracting State may, on or before June 30 in any calendar year after the fifth year
following the exchange of instrument of ratification, give notice of termination to the
other Contracting State and in such event the Convention shall cease to have effect as
respect income accruing or arising on or after the first day of July in the calendar year
next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorized hereto, have signed this Convention.
DONE in duplicate at Dacca this 15th day of October, one thousand nine hundred and eighty
one in the English language.
| FOR THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF PAKISTAN | FOR THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF BANGLADESH |
AHADULLAH AKMAL,
Additional Secretary
Published in the Gazette of Pakistan, Extraordinary, Part II, dated 15th July, 1987.
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