ISLAMABAD: The Federal Board of Revenue (FBR) has enforced the revised the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion between Pakistan and Hungary for exchange of information of taxpayers in the respective states.

The FBR has notified the revised convention through issuance of a notification, here on Wednesday. According to the notification, Pakistan and Hungary had signed the protocol in July 2020, to amend the existing Convention for the Avoidance of Double Taxation.

In terms of Article 2 of the protocol, the contracting states shall notify each other through diplomatic channels that all the legal procedures for the entry into force of this protocol have been completed, and the protocol shall enter into force on the thirtieth day upon the receipt of the later notification.

Under the new development, both Pakistan and Hungary have completed all the legal procedures required for the entry into force of the protocol. In exercise of the powers conferred by sub-section (1) of section 107 of the Income Tax Ordinance, 2001, the federal government is pleased to direct that the protocol shall come into force.

Under the exchange of information provision of the convention, the competent authorities of both the countries shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the contracting states.

In no case, shall the provisions of the "exchange of information provision" be construed to permit a contracting state to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person, the revised convention added.

Copyright Business Recorder, 2021