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S.R.O. 145(I)/74, dated 7th February, 1974. - Whereas the annexed Supplementary Convention between the Government of the Federal Republic of Germany for the 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 49AA of the Income-tax Act, 1922 (XI of 1922), the Federal Government is pleased to direct that all the provisions of the said agreement shall be given effect to in Pakistan.

Annex

SUPPLEMENTARY CONVENTION BETWEEN
THE FEDERAL REPUBLIC OF GERMANY AND THE ISLAMIC REPUBLIC
OF PAKISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT OF TAXES ON INCOME

THE FEDERAL REPUBLIC OF GERMANY AND PAKISTAN

DESIRING to supplement the Convention of August 7th, 1958, between the Federal Republic of Germany and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, as amended by the Protocol signed on August 27th, 1963, and due to come into force after the expiration of one month following the date on which the instruments of ratification shall be exchanged, (the said Convention, thus amended, herein after being referred to as the "Convention of August 7th, 1958").

HAVE AGREED AS FOLLOWS:
ARTICLE I

(1) Profits derived by an enterprise of one of the territories from operating ships whose port of registry is in that territory, shall be exempt from tax in the other territory, unless the ship is operated wholly or mainly between places within such other territory.

(2) The provisions of paragraph (1) shall likewise apply in respect of participations in pools, in a joint business or in an international operations agency of any kind by enterprises engaged in the operation of ships in international traffic.

ARTICLE II

Instead of the credit admissible in accordance with clause (dd) of sub-paragraph (b) of paragraph (3) of Article XIV of the Convention of August 7th, 1958, there shall be allowed as a credit against Federal Republic tax on income payable in respect of interest exempted under the provisions of paragraph (2) of Article VII of the Convention of August 7th, 1958, an amount equal to the Pakistan tax which would have been payable according to the laws of Pakistan but for an exemption granted by the Notification S.R.O. 17(R) dated July 1st, 1960 under Section 60(1) of the Pakistan Income-tax Act or by any other provision or statutory rule which may be made subsequently granting an exemption of a substantially similar character or modifying it only in minor respects so as not to affect its general character.

ARTICLE III

(1) Nothing contained in the Convention of August 7th, 1958 shall effect the application of Articles I and II of this Supplementary Convention.

(2) In applying this Supplementary Convention the provisions of the Convention of August 7th, 1958 for the application of the said Convention shall likewise apply.

ARTICLE IV

This Supplementary Convention shall also apply to Land Berlin, provided that the Government of the Federal Republic of Germany has not delivered a contrary declaration to the Government of Pakistan within three months from the date of entry into force of this Supplementary Convention.

ARTICLE V

(1) This Supplementary Convention shall be ratified and the instruments of ratification shall be exchanged in Islamabad as soon as possible.

(2) This Supplementary Convention shall come into force after the expiration of one month following the date on which the instruments of ratification are exchanged and shall thereupon have effect.

(a) In respect of Article I of this Supplementary Convention for profits derived from operating ships arising after December 31st, 1966.

(b) In respect of Article II of this Supplementary Convention for interest to which paragraph (2) of Article VII of the Convention of August 7th, 1958 as amended by the Protocol amending the Convention of August 7th, 1958, between the Federal Republic of Germany and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the prevention of Fiscal Evasion with respect to Taxes on Income signed on August 27th, 1963, applies.

ARTICLE VI

(1) This Supplementary Convention shall continue in force as long as the Convention of August 7th, 1958, remains effective.

(2) Notwithstanding the provisions of paragraph (1) of this Article, any Contracting State may, on or before the 30th day of June in any calendar year after the year 1972, give to the other Contracting State notice of termination; and in such event this Supplementary Convention shall cause to be effective.

(a) in Pakistan, in respect of the "previous years" (as defined by the tax laws of Pakistan) beginning on or after the first day of April next following such written notice of termination, and

(b) in the Federal Republic, for the calendar year beginning on or after the first day of January, next following such written notice of termination.

If such notice of termination shall have been given, the convention of August 7th, 1958, shall from the time when this Supplementary Convention ceases to be effective, be applied as if this Supplementary Convention had not entered into force.

DONE at Islamabad on 24th January, 1970 in duplicate in the German and English languages, both texts being equally authentic.

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