Agreement in Principle on the Protocol Amending the Income Tax Treaty between Japan and Pakistan

June 15, 2007

After negotiations since February this year, the Governments of Japan and Pakistan have reached an agreement in principle to revise the Convention between the Government of Japan and the Government of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Income Tax Treaty) signed in 1959. On June 15 (Fri), this agreement in principle was announced.

Reflecting close economic relations between Japan and Pakistan, the new Convention contains extensive revisions of the existing Convention, while modernizing the regulations based on the international model of the Income Tax Treaty, with a view to positively promoting mutual investment while taking measures to prevent fiscal evasion. The new Convention revises the taxation formula for business income, and clarifies the limit of withholding tax rates imposed on dividends, interest and royalties paid between the two countries.

After the two governments complete the necessary procedures, the new Convention will be signed. It will be put into effect after it is approved by the Diet.

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