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Role of Double Taxation
Agreements
The international economic law could be studied with
reference to the development of law relating to economics in its absolute terms or
determination for the rules and regulations concerning with the economic and commercial
relations between the subjects of all the countries world over. However, the second aspect
is more relevant. With the increasing industrialisation of trade, commerce and the
globalization of finance, production and technology, countries in the world cannot remain
aloof from each other. The interdependence of the countries is so great that any economic
imbalance in one country affects the economy in the other or influences its course.
National policies have, therefore, become international-oriented. The national policies
relating to fiscal matters nowadays do not ignore its international orientation. It is
specifically reflected in the tax legislation. It is a well-known fact that any change in
tax laws of a country has the effect of influencing its trade and economic relations with
other countries. Therefore, each country exercises great care and caution in the
formulation of its tax laws so as not to endanger its international economic interests.
What is, therefore, relevant in the present day context is the interest of the nation's
international economy. To avoid head on collision between these interests, some rules and
regulations are required to be framed for the guidance of those nations.
Pakistan in the initial period of its existence overwhelmingly depended on domestic,
rather than the world market. Its trade, therefore, had a stunted growth and grew less
rapidly than the world trade. It was mainly in the early eighties that the Pakistani
economy started opening up and the external sector started playing a significant role in
the modernisation of industry and technological advancements. Till then the rate of
technological progress had been abysmally low. For its economic growth, the purchase of
technology is not the only option Pakistan has, to follow the route of foreign investment,
joint ventures, etc. In its anxiety to encourage foreign investment, it is prepared to
surrender its revenue for economic growth and thus forego taxes which could have been
otherwise due, through the device of double taxation agreements.
Till March 31, 1998, Pakistan has concluded comprehensive tax treaties for avoidance of
double taxation with the following 37 countries:
| 1. Austria |
2. Bangladesh |
| 3. Belgium |
4. Canada |
| 5. China |
6. Denmark |
| 7. Finland |
8. France |
| 9. Germany |
10. Holland |
| 11. Hungary |
12. Indonesia |
| 13. Ireland |
14. Italy |
| 15. Japan |
16. Kazakhstan |
| 17. Korea |
18. Libya |
| 19. Malaysia |
20. Malta |
| 21. Mauritius |
22. Nigeria |
| 23. Norway |
24. Philippines |
| 25. Poland |
26. Romania |
| 27. Singapore |
28. Sri Lanka |
| 29. Sweden |
30. Switzerland |
| 31. Thailand |
32. Tunisia |
| 33. Turkey |
34. Turkmenistan |
| 35. United Arab Emirates |
36. United Kingdom |
| 37. Uzbekistan |
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With the following eight countries double taxation
agreements have been concluded for air/shipping business:
| 1. Greece |
(Shipping/Air Transport) |
5. Kenya |
(Air transport) |
| 2. India |
(Air transport) |
6. Lebanon |
(Air transport) |
| 3. Iran |
(Air transport) |
7. Saudi Arabia |
(Air transport) |
| 4. Jordan |
(Air transport) |
8. USA |
(Shipping business) |
The texts of double taxation agreements with
above-mentioned countries are arranged in alphabetical order with each country
constituting an independent portion in the book. It will help in smooth and error-free
updating. The future changes and amendments with existing countries and new agreements
will be provided through a quarterly up-dating service.
