ISLAMABAD: The Federal Board of Revenue (FBR) has commenced discussions with Iraq regarding the mutual avoidance of double taxation. A press release issued on Thursday stated that the FBR has begun negotiations on an agreement aimed at eliminating the occurrence of double taxation concerning income and capital, while also preventing tax evasion and avoidance. Representatives from both countries’ tax departments convened in Islamabad for the initial round of negotiations spanning from August 7 to August 9, 2023.

Following in-depth discussions, a mutual agreement was reached, leading to the creation of a preliminary version of the agreement. The heads of the respective delegations endorsed this draft on August 9, 2023, in Islamabad. The anticipated convention holds the potential to not only safeguard against instances of double taxation affecting residents of both nations but also to foster economic collaboration and augment investments. Furthermore, it is set to reinforce the already established economic relations between the two countries.

The convention is poised to offer a reliable framework concerning tax regulations pertinent to cross-border commercial transactions, encompassing areas such as dividends, interests, royalties, fees for technical services, and income sourced from automated digital services. By alleviating the burden of double taxation on taxpayers from both nations, this agreement is expected to provide impetus to trading activities in both countries.