ABSTRACT

Double Tax Treaties have been widely used to reduce double taxation for more than 60 years. The International Tax Environment is evolving continuously and these changing circumstances require that countries review and update their tax treaties constantly to protect their taxing rights. This study reviewed Pakistan’s tax treaties with its major FDI Partners and found that the country needs to work rigorously to update its existing tax treaties to prevent loss of tax revenue through treaty abuse. Pakistan has been unable to update its tax treaties in some cases such as the Pakistan-US Tax treaty and there is a dire need to prepare a roadmap to evaluate and then re-negotiate tax treaties which cause tax loss to Pakistan. Drafting a model tax treaty for Pakistan and mechanisms for parliamentary supervision and incorporating the input from business sector is also the need of the hour.