ISLAMABAD, March 25: Pakistan and Vietnam have signed a agreement for the avoidance of double taxation and fiscal evasion between the two countries to promote bilateral trade.

The two sides exchanged the agreement initialled by Finance Minister Shaukat Aziz and Vietnamese Trade Minister Truong Dinh Tuyen here on Thursday. 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. Officials said that although Pakistan's trade with Vietnam at present is not much, there still exists considerable potential for its expansion and reciprocal investment.

The agreement, the officials said would open new avenues for business and economic cooperation with this part of the world. He said that the main beneficiary of the agreement would be the textile sector. "The agreement will be an important step towards strengthening bilateral economic relations between the two countries."