Islamabad: Pakistan and Bulgaria recently announced the enforcement of a convention for avoiding double taxation and preventing fiscal evasion against income taxes, a news source reported. Both sides had signed the convention last year; with it being set to become applicable starting July 1.
In this regard, the Federal Board of Revenue (FBR) issued an SRO on Thursday. It stated that the convention would apply to taxes on income imposed on behalf of the ‘Contracting State’ (Pakistan or Bulgaria), or its local authorities or political subdivisions regardless of the manner in which the taxes apply.
The SRO explained that the convention would apply to all taxes levied on total income or elements of the incomes — including taxes on gains from alienation of property (immovable or movable) and total salaries paid by organisations.
In terms of existing taxes, the convention will apply to personal incomes, patent tax, and corporate income tax in case of Bulgaria. For Pakistan, the convention will apply to income and super taxes. According to the rules of the convention, the income of a resident of a Contracting State through immovable property — including agriculture or forestry — located in the other Contracting State may be levied in that other state.
For implementation of the convention’s provisions or enforcement of domestic laws pertaining to all taxes imposed by the Contracting State (or its local authorities and political subdivisions), Pakistan and Bulgaria will exchange the relevant information through their authorities concerned. They will be able to share the relevant information as long as the taxation in subject was not contrary to the convention’s rules.
