ISLAMABAD, Nov 24: Pakistan and the Swiss Confederation on Monday signed a treaty for the avoidance of double taxation previously payable on the income of residents and businessmen of both the countries.

Swiss Ambassador to Pakistan Markus Peter and Chairman Federal Board of Revenue (FBR) Ahmad Waqar exchanged the necessary instrument of intent to bring into force the revised convention for avoidance of double taxation.

Addressing a ceremony held at the FBR headquarters, Ahmad Waqar hailed the revised convention as the necessary step towards providing safeguards against double taxation as well as promoting economic cooperation, investment and bilateral economic relations between the countries.

He said the convention would also provide adequate taxation rules applicable to cross-border business transactions, dividends, interests, royalties and fee for technical services etc.

Swiss Ambassador Markus Peter expressed hope that the new convention would be a significant step in improving the bilateral taxation relations.

FBR Member Direct Taxes Irfan Nadeem welcomed the Swiss ambassador and explained the main features of the revised convention.

According to the revised convention, dividend in case of companies having 20 per cent share would be taxed at 10 per cent, and all other cases would be taxed at 20 per cent in the source country. Similarly, interest income may also be taxed in the contracting state in which it arises at 10 per cent of the gross amount.

The convention further stipulates royalty in the source country to be taxed at 10 per cent; fee for technical services to be taxable at 10 per cent in the source country; and grant of exemption to students on remuneration from the employment, which does not exceed 18,000 Swiss francs or the equivalent thereof in Pakistan currency at the official rate of exchange.