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Saudi Arabia
AGREEMENT FOR THE AVOIDANCE OF DOUBLE TAXATION
BETWEEN THE KINGDOM OF SAUDI ARABIA AND
THE ISLAMIC REPUBLIC OF PAKISTAN
S.R.O. 628(I)/81, dated the 21st June, 1981. - Whereas the
annexed Agreement between the Kingdom of Saudi Arabia and the Islamic Republic Of Pakistan
for the avoidance of double taxation of income of Air Transport enterprise 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 agreement shall be given effect in Pakistan in accordance with
provisions of Article 6(2) of the said agreement.
Annexure
IN THE NAME OF ALLAH, THE MOST BENEFICENT, THE MOST MERCIFUL
AGREEMENT BETWEEN THE KINGDOM OF SAUDI ARABIA AND THE
ISLAMIC REPUBLIC OF PAKISTAN FOR THE AVOIDANCE OF DOUBLE
TAXATION OF INCOME OF AIR TRANSPORT ENTERPRISES.
The Government of the Kingdom of Saudi Arabia and the Islamic Republic of Pakistan, desiring to conclude an agreement for the avoidance of double taxation by mutual exemption from income-tax levied on the income of air transport enterprises from Exercise of air transport in international traffic have agreed as follows:
ARTICLE 1
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on
behalf of each Contracting State 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 property and
taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to which the Agreement shall apply are in Particular:
(a) In the case of Islamic Republic of Pakistan; the income-tax, super-tax and the
surcharge (hereinafter referred to as "Pakistan Tax").
In the case of Kingdom of Saudi Arabia; the income-tax, super-tax, and the surcharge
('hereinafter referred to as "Saudi Tax").
4. This Agreement shall also apply to any identical or substantially similar taxes as are
subsequently imposed in addition to, or in place of the existing taxes.
ARTICLE 2
DEFINITIONS
In this Agreement, unless the context otherwise requires:-
(a) the terms "a Contracting State" and "the other Contracting State"
mean, Pakistan or Saudi Arabia, as the context requires;
(b) the terms "air transport enterprise of a Contracting State" and the
"air transport enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State;
(c) the term "exercise of air transport" means the operational activity of
transportation by air of persons, animals, goods and mail conducted by an enterprise of a
Contracting State including sale of tickets and similar documents used for the purposes of
transport;
(d) the term "international traffic" means any transport by aircraft operated by
an enterprise of a Contracting State, except when such transport is made solely between
places in the other Contracting State;
(e) the term "competent authority" means:
(i) in the case of the Islamic Republic of Pakistan - the Central Board of Revenue;
(ii) in the case of the Kingdom of Saudi Arabia - the Ministry of Finance and National
Economy;
(f) the term "resident of a Contracting State" means any person, who under the
law of that State, is liable to taxation therein by reason of his domicile, residence,
place of management or any other criterion of a similar nature;
(g) the term "person" includes an individual, a corporation, company or any
other body of persons.
ARTICLE 3
AIR TRANSPORT
1. Income and profits derived by an enterprise of a Contracting
State from the exercise of air transport in international traffic shall be exempt from tax
in the other Contracting State.
2. The provision of paragraph I shall also apply to income and profits derived by an
enterprise of a Contracting State from its participation in a pool or a joint business.
3. For the purposes of this Article profits derived by an enterprise of a Contracting
State from the exercise of air transport in international traffic, also include income
derived from:
(a) the rental, lease or maintenance of aircraft;
(b) training schemes, management and other services rendered by an air transport
enterprise of one Contracting State to the air transport enterprise of the other
Contracting State.
ARTICLE 4
REMUNERATION FOR PERSONAL SERVICES
1. Remuneration in respect of an employment exercised on an
aircraft operated in international traffic by an enterprise of a Contracting State, shall
be taxable only in that State.
2. Remuneration derived by an employee of an air transport enterprise of a contracting
state in respect of employment exercised in the other contracting state shall be taxable
in that other State if the employee is present in that other State for a period exceeding
in aggregate 183 days in any fiscal year:
Provided that the provisions of the above paragraph shall not apply to an employee who is
a national of the first-mentioned Contracting State and who was not a resident of the
other Contracting State on the date of employment, in which case such employee shall not
be taxable in that other State.
ARTICLE 5
MUTUAL AGREEMENT PROCEDURE
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 Agreement.
ARTICLE 6
ENTRY INTO FORCE
1. This Agreement shall be ratified and the instruments of
ratification shall be exchanged in due course of time.
2. The Agreement shall enter into force upon the exchange of instruments of ratification
and its provisions shall have effect:
(a) In the Islamic Republic of Pakistan, on any income arising on or after 1st of July
1972, except the provisions of paragraph 2 of Article 4 which shall be effective from the
first day of July of the year preceding the year in which this Agreement. is ratified.
(b) In the Kingdom of Saudi Arabia, on any income arising on or after 1st of Muharram,
1393 AH.
ARTICLE 7
TERMINATION
This Agreement shall remain in force indefinitely but terminated
by either Contracting State by giving notice of termination at least six months before the
end of any calendar year, in which case, this Agreement, shall cease to have effect from
the end of the calendar year in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned duly authorised thereto, have signed this Agreement and
have affixed thereto their seal.
DONE at Riyadh on 10-1-1401 corresponding to 18-11-1980 in the English and Arabic
languages, both the texts being equally authentic.
| For the Government of Pakistan | For the Government of Saudi Arabia |
Sd/- |
Sd/- |
ABDUL WAHEED,
Joint Secretary.
[C. No. 2(1) IT-2/72.]
Published in the Gazette of Pakistan, Extraordinary, Pages 1218-1221 (II), dated
22-06-1981
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