Avoidance of double taxation: Pakistan, Senegal may sign agreement

Pakistan and Senegal are to sign an agreement on avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income, well informed sources in Federal Board of Revenue (FBR) told Business Recorder.
According to the sources, Ministry of Foreign Affairs (MoFA) has informed the Revenue Division that Senegal has expressed a desire to enter into an agreement on avoidance of double taxation with Pakistan. The MoFA has further revealed that there is no objection from political point of view on the said agreement, as it would further strengthen the existing bilateral trade and investment relations between the two states.
The basic purpose of an income tax treaty is to facilitate international trade and investment by removing tax barriers. An income tax treaty establishes a stable framework that allows international trade and investment to flourish, by setting out clear ground rules that govern tax matters between the contracting states, and by providing certainty to business environment.
It protects the taxpayers from excessive taxation, double taxation, and discriminatory tax treatment. It also provides a mechanism for dealing with disputes or questions of application that may arise after the treaty enters into force. Another major objective of a tax treaty, although of greater interest to tax authorities, is the prevention of tax evasion through exchange of information between tax authorities.
The figures of Pakistan''s trade with Senegal as reported by the Ministry of Commerce in respect to the past fours years are disappointing. According to the State Bank of Pakistan (SBP), no remittances have been made by Pakistani Corporations to set up their business/offices/branches in Senegal over the past three years.
"Though the trade volume is not substantial, yet it has the potential to grow further if favourable environment is provided," sources quoted FBR as saying in its comments. Due to saturation of the traditional markets, Pakistan also needs to explore new avenues for export of goods and services, and expansion of businesses by Pakistani entrepreneurs, the sources continued.
Some of the important states of the world including Belgium, Canada, France, and Italy have agreements on avoidance of double taxation with Senegal. Such an agreement between Pakistan and Senegal will not only provide safeguards against double taxation on the income of the residents of both the countries, but will also help strengthen and enhance the existing economic relations between the two states, sources added. According to sources, Revenue Division has sought permission from the federal cabinet to initiate dialogue with Senegal for the agreement.