Islamabad, August 10, 2023 – In a significant step toward strengthening economic cooperation and enhancing investment, Pakistan and Iraq have successfully signed a convention aimed at eliminating double taxation within their respective jurisdictions.
This important agreement was the outcome of detailed negotiations initiated by the Federal Board of Revenue (FBR) with the Republic of Iraq.
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Tax delegations from both countries convened in Islamabad from August 7 to 9, 2023, for the first round of negotiations. After extensive discussions, a consensus was reached, leading to the initialing of the draft Convention by the respective heads of delegation on August 9, 2023, in Islamabad.
This Convention holds several benefits for the residents of both Pakistan and Iraq. One of the primary advantages is the safeguard it provides against double taxation on income, ensuring that individuals and entities in both countries do not face double taxation burdens. Additionally, the Convention is expected to foster closer economic cooperation and encourage increased investment activities between the two Contracting States.
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The agreement offers much-needed certainty in terms of taxation rules, particularly those applicable to cross-border business transactions, dividends, interests, royalties, fees for technical services, and income from automated digital services. By establishing clear and agreed-upon rules in these areas, the Convention reduces ambiguity and ensures that taxpayers in both countries can plan their financial activities with greater clarity.
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The elimination of double taxation, as facilitated by this Convention, is expected to have a positive impact on trading activities between Pakistan and Iraq. The relief from double taxation will create a more conducive environment for businesses to engage in cross-border trade, ultimately benefiting the economies of both nations.
This significant step demonstrates the commitment of Pakistan and Iraq to foster stronger economic ties, provide a stable and predictable tax environment for businesses, and create opportunities for mutual growth and prosperity. The Convention represents a noteworthy milestone in the ongoing development of the bilateral economic relationship between the two countries.
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