Double taxation treaty with Pakistan came into force
11.01.2016Company: PricewaterhouseCoopers Česká republika, s.r.o.
The double taxation treaty between the Czech Republic and the Islamic Republic of Pakistan and the elimination of tax evasion in the area of income tax can be applied by the Czech Republic from 1 January 2016 and by Pakistan from 1 July 2016. The treaty came into force on 30 October 2015.
Among other things, the treaty regulates the creation of a service-related permanent establishment if the duration of its activities exceeds six months in any period of 12 months. According to the treaty, dividends paid out may be taxable in the source state in the amount of 5% if the beneficial owner owns at least 25% of the capital (in all other cases the dividend income is taxed at 15%). Royalties may be taxable up to 10% of the gross amount of the fee.
Rather unusually, the treaty also includes the possibility to tax income arising from fees for services in the same way as other royalties, if it concerns technical, managerial or consulting services provided by a resident of one contracting state to a resident of the other contracting state.
For more information about the above or for help with business activities in this region, please contact Zenon Folwarczny or Jan Hájek.
Zenon Folwarczny, +420 251 152 580
