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1. Fees for technical services arising in a Contracting State and paid to an enterprise of the other Contracting State may be taxed in that other State.

2. However, such fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner thereof, the tax so charged shall not exceed 10 per cent of the gross amount of the fees.

3. The term "fees for technical services" as used in this Article means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision by the enterprise of the services of technical or other personnel) but does not include consideration for any construction, assembly or like project undertaken by the recipient or consideration which would be income falling under Article 15 of the Agreement.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the contract in respect of which the fees for technical services 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. Fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local or statutory authority or a resident of that State. Where, however, the person paying the fees for technical services, 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 obligation to make the payments was incurred, and the payments are borne by such permanent establishment, then such fees for technical services shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the fees for technical services exceeds the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 14
CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

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 with the whole enterprise) or of such fixed base, may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in international traffic or moveable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

ARTICLE 15
PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration or income derived by a resident of a Contracting state in respect of personal services including professional services or other activities of an independent character) shall be taxable only in that State unless the services are rendered in the other Contracting State. If the services are so rendered, such remuneration or income as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration or income derived by a resident of a Contracting State in respect of services rendered 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 any 12-month period, and

(b) the services are rendered for or on behalf of a person who is a resident of the first- mentioned State, and

(c) the remuneration or income is subject 'to tax in the first-mentioned State, and

(d) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State, and

(e) the payment for independent personal services is not borne by a resident of the other State or by a permanent establishment or a fixed base which a resident of the first-mentioned State has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard* a ship or a aircraft operated in international traffic shall be taxable only in that Contracting State.

*The word "aboard" has wrongly appeared as "abroad" in the Official Gazette.

ARTICLE 16
DIRECTORS' FEES

1. Directors' fees and other 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 may be taxed in that other state.

2. The remuneration which a person to whom paragraph 1 applies derives from the company in respect of the discharge of day-to-day functions of a managerial or technical nature may be taxed in accordance with the provisions of Article 15.

ARTICLE 17
ARTISTES AND ATHLETES

Notwithstanding the provisions of Article 15, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

Such income shall, however, be exempt from tax in that other State if such activities are supported, wholly or substantially, from the public funds of the Government of either Contracting State or a local or statutory authority thereof.

2. Where income in respect of personal activities exercised in a Contracting State 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 and 15, be taxed in that State.

Such income shall, however, be exempt from tax in that State if such activities are supported, wholly or substantially, from the public funds of the Government of either Contracting State or a local or statutory authority thereof.

3. Notwithstanding the provisions of Article 7, where the activities mentioned in paragraph 1 are provided in a Contracting State by an enterprise of the other Contracting State the profits derived from providing these activities by such an enterprise may be taxed in the first-mentioned Contracting State unless the enterprise is substantially supported from the public funds of the other Contracting State, including any political sub-division, local authority or statutory body thereof, in connection with the provision of such activities.

ARTICLE 18
PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

ARTICLE 19
REMUNERATION AND PENSION IN RESPECT OF GOVERNMENT SERVICE

1. (a) Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local or statutory 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 other State and the individual is a resident of that other State who:

(i) is a national of that other State; or

(ii) did not become a resident of that other State solely for the purpose of rendering the services.

2. Any pension paid by, or out of funds created by a Contracting State of a political sub-division or a local or statutory 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.

3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pension in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local or statutory authority thereof.

ARTICLE 20
PROFESSORS AND TEACHERS

1. An individual who, at the invitation of a university, college, school or other similar educational institution which is recognized in a Contracting State, visits that State for a period not exceeding 2 years solely for purpose of teaching or conducting research or both at such educational institution and who is immediately before that visit, a resident of the other Contracting State shall be exempt from tax in the first mentioned State on:

- any remuneration for such teaching or research; and
- any income which arises or accrues to him outside that State.

2. This Article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons.

3. For the purposes of this Article, the term "recognized" means recognized by the competent authorities of the respective States.

ARTICLE 21
STUDENTS AND APPRENTICES

1. An individual who is a resident of Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State solely as a student at a university, college, school or other similar educational institution which is recognized in that other State or as a business or technical apprentice therein for a period not exceeding five years from the date of his first arrival in that other State in connection with that visit, shall be exempt from tax in that other State on:-

(a) all remittances from abroad for the purposes of his maintenance, education or training;

(b) any remuneration not exceeding the sum of 2500 United States dollars or its equivalent sum in Singapore or Pakistan currency during any calendar year, or such amount as may be agreed from time to time between the competent authorities of the Contracting States, for personal services rendered in that other State with a view to supplement the resources available to him for such purposes; and

(c) any income which arises or accrues to him outside that other State.

2. An individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State for the purposes of study, research or training solely as a recipient of a grant, allowance or award from the Government of either State or from a scientific educational religious or charitable organization or under a technical assistance programme entered into by the Government of either State for a period not exceeding five years from the date of his first arrival in that other State in connection with that visit, shall be exempt from tax in that other State on:-

(a) the amount of such grant, allowance or award;

(b) all remittances from abroad for the purposes of his maintenance, education or training;

(c) any remuneration not exceeding the sum of 3600 United States dollars or its equivalent sum in Singapore or Pakistan currency during any calendar year, or such amount as may be agreed from time to time between the competent authorities of the Contracting States, for personal services rendered in that other State provided such services are performed in connection with his study, research or training or are incidental thereto; and

(d) any income which arises or accrues to him outside that other State.

3. Any individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State as an employee of, or under contract with, the Government or an enterprise of the first-mentioned State solely for the purpose of acquiring technical, professional or business experience for a period not exceeding twelve months from the date of his first arrival in that other State in connection with that visit, shall be exempt from tax in that other State on:-

(a) all remittances from abroad for the purposes of his maintenance, education or training; any remuneration not exceeding the sum of 5000 United States dollars or its equivalent sum in Singapore or Pakistan currency during any calendar year, or such amount as may be agreed from time to time between the competent authorities of the Contracting State, for personal services rendered in that other State provided such services are performed in connection with the acquisition of such experience or are incidental thereto; and

(c) any income which arises or accrues to him outside that other State.

4. For the purposes of this Article, the term "recognized" means recognized by the competent authorities of the respective States.

5. The benefits of paragraph 1, 2 or 3 shall not be concurrently cumulative.

ARTICLE 22
OTHER INCOME

Items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may be taxed in that other State.

ARTICLE 23
ELIMINATION OF DOUBLE TAXATION

1. The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective States except where express provisions to the contrary are made in this Agreement. Where income is subject to tax in both states. Relief from double taxation shall be given in accordance with the following paragraphs.

2. In the case of Pakistan, subject to the provisions of the laws of Pakistan regarding the allowance as a credit against Pakistan tax, the amount of Singapore tax payable, under the laws of Singapore and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of Pakistan, in respect of income from sources within Singapore which has been subjected to tax both in Pakistan and Singapore, shall be allowed as a credit against the Pakistan tax payable in respect of such income but in an amount not exceeding that proportion of Pakistan tax which such amount bears to the entire income chargeable to Pakistan tax.

3. In the case of Singapore, subject to the provisions of the laws of Singapore regarding the allowance as a credit against Singapore tax on tax payable in any country other than Singapore, tax payable under the laws of Pakistan and in accordance with this Agreement, whether directly or by deduction, on income from sources within Pakistan shall be allowed as a credit against any Singapore tax computed by reference to the same income on which the Pakistan tax is computed. The credit shall not, however, exceed that part of the Singapore tax, as computed before the credit is given, which is attributable to such item of income derived from Pakistan.

4. For the purposes of allowance as a credit against the tax payable in Singapore or Pakistan, as the context requires, the tax payable on dividends, interest, royalties or fees for technical services in a Contracting State shall be deemed to include the tax which is otherwise payable in that State in accordance with the provisions of this Agreement had it not been reduced or exempted by that State in pursuance of its tax incentives programme for the promotion of economic development. Provided that the credit referred to in this paragraph shall be:

(a) in the case of dividends an amount of 15 per cent of the gross amount of such dividends;

(b) in the case of interest an amount of 12.5 per cent of the gross amount of such interest; and

(c) in the case of royalties or fees for technical services an amount of 10 per cent of the gross amount of such royalties or fees for technical services.

ARTICLE 24
NON-DISCRIMINATION

1. The 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 term "national" means:

(a) all individuals possessing the nationality of a Contracting State;

(b) all legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State.

3. 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.

4. Nothing in this Article shall be construed ·

(a) as obliging either of the Contracting States, to grant to persons not resident in its territory those personal allowances and reliefs for tax purposes which are by law available only to persons who are so resident;

(b) as affecting any provisions of the laws of either Contracting State regarding the imposition of tax on a non-resident person, other than a company; or

(c) as affecting any provisions of the laws of either Contracting State regarding the grant of rebate of tax to companies fulfilling specific requirements regarding the declaration and payment of dividends; or

(d) as obliging a Contracting State to grant to nationals of the other Contracting State those personal allowances, reliefs and reductions for tax purposes which it grants to its own nationals who are not resident in that Contracting State or to such other persons as may be specified in the taxation laws of that Contracting State.

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.

ARTICLE 25
MUTUAL AGREEMENT PROCEDURE

1. Where a resident of a Contracting State 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 Agreement he may, irrespective of the remedies provided by the taxation 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. An application must be presented in writing stating the grounds for claiming the revision of such taxation within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the 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 this Agreement.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Agreement. 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 Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Agreement. 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 Agreement. Such persons or authorities shall use the information only for such purposes.

2. In no case shall the provisions of paragraph i 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 or of the 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 (order public).

ARTICLE 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreement.

ARTICLE 28
TERRITORIAL EXTENSION

1. This Agreement 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 imposes taxes substantially similar in character to those to which this Agreement applies. Any such extension shall take effect from such date and subject to such modifications 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.

2. Unless otherwise agreed by both Contracting States, the termination of this Agreement by one of them under Article 30 shall also terminate, in the manner provided for in that Article, the application of this Agreement to any State or territory to which it has been extended under this Article.

ARTICLE 29
ENTRY INTO FORCE

1. The Contracting States shall notify each other that the constitutional requirements for the entry into force of this Agreement have been complied with.

2. This Agreement shall enter into force on the date of the latter of the notifications referred to in paragraph 1 and its provisions shall have effect in respect of income derived on or after the first day of January, 1987.

ARTICLE 30
PERIOD OF VALIDITY

This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination on or before the thirtieth day of June of any calendar year following after the period of three years from the year in which the Agreement enters into force. In such event, the Agreement shall cease to have effect in respect of income derived on or after the first day of January in the second calendar year following the year in which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

DONE in duplicate at Singapore this day of 13th April, 1993 in the English language.

PROTOCOL

At the time of signing the Agreement between the Islamic Republic of Pakistan and the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on income, the undersigned have agreed that the following provisions shall form an integral part of the Agreement:-

(1) In respect of paragraph 1 of Article 7 of the Agreement, it is understood that in Pakistan the profits attributable to a permanent establishment shall include:-

(a) profits from sales in Pakistan of goods or merchandise of the same or similar kind as those sold through the permanent establishment; or

(b) profits form other business activities carried on in Pakistan of the same or similar kind as those effected through the permanent establishment.

These provisions shall, however, not apply if the enterprise proves that such sales or activities could not have been reasonably undertaken by the permanent establishment.

(2) In respect of sub-paragraph (b) of paragraph 3 of Article 7 of the Agreement, it is understood that the words "otherwise than towards reimbursement of actual expenses" in the context of royalties, fees or other similar payments mean that if the head office of an enterprise or any of its other offices makes such payments to a third party which relate to the activities of the permanent establishment of the enterprise, then any reimbursement of such payments to the head office or other office by the permanent establishment would be allowed as a deduction in the determination of its profits. Likewise any such reimbursement by the head office or other offices to the permanent establishment would not be excluded from the income of the permanent establishment.

(3) In respect of clause (ii) of sub-paragraph (b) of paragraph 4 of Article 10 of the Agreement, it is understood that the term "shipbuilding" includes ship-repairing.

(4) In respect of sub-paragraph (b) of paragraph 7 of Article 10 of the Agreement, it is understood that where, for the purposes of Article VII of the Agreement between the Government of Malaysia and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed in Singapore on 26th December, 1968 -

(a) a dividend was paid by a company-

(i) which was resident in both Malaysia and Singapore and the meeting at which the dividend was declared was held in Singapore; or
(ii) which was resident in Malaysia and at the time of payment of that dividend the company declared itself to be a resident of Singapore, the dividend shall be deemed to have been paid by a company resident in Singapore.

(b) a dividend was paid by a company-

(i) which was resident in both Malaysia and Singapore and the meeting at which the dividend was declared was held in Malaysia; or
(ii) which was resident in Singapore and at the time of payment of that dividend the company declared itself to be a resident of Malaysia the dividend shall be deemed to have been paid by a company not resident in Singapore.

(5) It is further understood that where this Agreement provides (with or without other conditions) that income from sources in Pakistan shall be exempt from tax, or taxed at a reduced rate, in Pakistan and under the laws in force in Singapore the same income is subject to tax by reference to the amount thereof which is remitted to or received in Singapore and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in Pakistan shall apply only to so much of the income as is remitted to or received in Singapore. However, this limitation does not apply to income derived by the Government of Singapore or any person approved by the competent authority of Singapore for the purpose of this paragraph. The term "the Government of Singapore" shall include its agencies and statutory bodies.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto, have signed this protocol.

DONE in duplicate at Singapore this day of 13th April, 1993 in the English language.

M. IQBAL FARID
Additional Secretary

[C. No. 2(2) IT-2/78]

Published in the Gazette of Pakistan, Extraordinary, Pages 1427-1453 (II), dated 18-09-1993.

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