ISLAMABAD, May 8: Pakistan and Tajikistan will sign a convention for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income between the two countries.

An official source in the Central Board of Revenue (CBR) told Dawn on Saturday that the convention will be signed during the up-coming visit of Tajik president, Emomali Rakhmonov to Islamabad from May 12.

Following detailed deliberations by the tax authorities of the two sides, the convention was initialled on April 14, the official said.

The agreement essentially emphasized the concept of taxation on income of international business transactions in the home country of the recipient.

It clearly defines the tax rules that will apply in case of cross-border business transactions, he added.

According to the official the agreement would open new avenues for business and economic cooperation with the central Asian countries.

Officials said although Pakistan's trade with Tajikistan at present is not much, there exists considerable potential for its expansion and reciprocal investment.

The agreement will be an important step towards strengthening bilateral economic relations between the two countries, added the official.