Avoidance of double taxation treaty on CPEC projects signed

Pakistani tax authorities and the Chinese tax department Thursday signed Third Protocol Agreement for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income.
Sources told Business Recorder that the Third Protocol Agreement would allow a Chinese bank and a state-owned investment fund of the Chinese government to avail income tax exemption on interest income from loans for energy projects under China-Pakistan Economic Corridor (CPEC). The said exemption would be exclusively available for the energy projects under CPEC. In this regard, a signing ceremony was held at the Federal Board of Revenue (FBR) House. Chairman FBR Nisar Muhammad Khan signed the convention on the behalf of Pakistan and Commissioner of State Administration of Taxation China Wang Jun inked the Third Protocol Agreement.
Special Assistant to Prime Minister on Revenue Haroon Akhtar, senior FBR officials and officials of State Administration of Taxation China were also present at the FBR House. Sources said that the Third Protocol Agreement between Pakistan and China under avoidance of double taxation and prevention of fiscal evasion has declared a Chinese bank and a Chinese investment fund as 'State Banks' exclusively for the purpose of interest income being derived from loans for energy projects in Pakistan under the CPEC.
When negotiations were under way between the two sides in the past, Chinese side had proposed Protocol in such a way to cover the entire China-Pakistan Economic Corridor instead of only the energy part of the Corridor. In the past, the Second Protocol was signed between Pakistan and China for avoidance of double taxation and prevention of fiscal evasion with respect to taxes.
According to the Second Protocol already signed between the two sides, "State Bank" in the case of China means, the People's Bank of China, the Bank of China, the Export-Import Bank of China, the Agricultural Development Bank of China and the China Development Bank, and in the case of Pakistan, it stands for the State Bank of Pakistan.