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" BASIC LEGAL FRAMEWORK OF   BASIC LEGAL FRAMEWORK OF INTERNATIONAL TAXATION IN PAKISTAN-III TAXATION OF NON-RESIDENTS   By   Amjad Javaid Hashmi, Advocate, High Court, Karachi   (i) On the principal topic of international taxation regime of Pakistan it is third article in the series and deals with the third theme i.e. taxing income of a non-resident person as dictated in sections 105 and 106 of the Income Tax Ordinance (the Ordinance). On this score, the law is underwritten with globally well established principles, concepts, conditions and limitations. A bare reading of the law stimulates a host of incidental compliance enforcement issues as it combines both charging and procedural features-a rarity.   (ii) The whole edifice of taxation of a non-resident person as incorporated in sections 105 and 106 of the Ordinance, in its essence, converge to one key principle, one key purpose and one key exemption.   (a) The key principle pertains to the connectivity of income of a non-resident person to the territory of Pakistan. It ordains that a non-resident person must have a Permanent Establishment (PE) in -Pakistan within the terms of section 2(41) of the Ordinance i.e. No PE NO TAXATION. It is a well recognized and basic principle of international tax law. A nonresident is chargeable to tax in Pakistan only when it has established or the Commissioner has determined the establishment of a PE i.e. a. fixed place of business in Pakistan within the scope of any one of its seven shades as defined in the provision.   (b) The key purpose is securing and avoiding erosion of the Pakistan share of the tax base from aggressive tax planning tactics by a non-resident person in the critical areas of capital restructuring (thin capitalization) or…