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03 November 2004
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Wednesday
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19 Ramazan 1425
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Saarc states fail to reach consensus on tax draft
By Mubarak Zeb Khan
ISLAMABAD, Nov 2: Tax experts of the seven Saarc-member countries failed to develop consensus on a draft multilateral tax treaty with limited scope with regard to avoidance of double taxation among the member countries at their recent meeting in Kathmandu.
Informed sources told Dawn on Tuesday that India, the originator of the draft included some articles which were exclusively for the developed countries for seeking maximum benefits from the member countries.
According to the sources, the Indian draft did not find favours with the developing countries like Pakistan and Least Developed Countries (LDCs) like Maldives, Bhuttan etc.
The draft would now be discussed in the next meeting to be held in Kathmandu and to be chaired by Pakistan. The date for the meeting will be fixed by the foreign offices of the Saarc states, added the sources.
The Saarc countries had concluded quite a few double taxation agreements with developed as well as developing countries. The agreements, conventions concluded in 1950s and 1960s were based on earlier models. However, after 1980, UN model modified by OECD model has been used for concluding such treaties with developed countries.
Pakistan has so far signed comprehensive agreements for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes with Bangladesh on January 1, 1980; with Nepal on January 25, 2001 and with Sri Lanka in January 1983.
Pakistan and India do have a limited purpose agreement for the avoidance of double taxation regarding international air transport, which was effective from March 1, 1989. Pakistan did not have any limited purpose or a comprehensive agreement for the avoidance of double taxation with Maldives and Bhutan.
It may be added that multilateral taxation treaties have been signed by a number of countries - Arab Tax Treaty (Egypt, Iraq, Jordan, Kuwait, Sudan, Syria and Yemen); a Multilateral Conventions adopted by - Bolivia, Columbia, Chile, Ecuador, Peru and Venezuela; Kenya, Tanzania, Uganda agreement; Nordic countries - Denmark; Finland, Iceland, Norway and Sweden.
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