The Supreme Court of Pakistan has dismissed, “with no order as to costs”, appeals against the High Court of Sindh and the Lahore High Court decision regarding the interpretation of Article VI of the ‘Convention between the Government of Pakistan and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income’. As per the apex court judgment, a copy of which is available with Business Recorder, the basic issue in all these cases was the interpretation of “(1) The rate of United States tax on dividends paid by a United States corporation to a Pakistan company- (i) not having a permanent establishment in the United States, and (ii) owning shares carrying more than 50 per cent of the voting power in the corporation paying such dividends. Shall not exceed fifteen per cent. “(2) (i) Where a United States corporation- has no permanent establishment in Pakistan, and (ii) is a public company… and (iii) owns shares carrying more than 50 per cent of the voting power of a company which is a resident of Pakistan and is engaged in an industrial undertaking of the classes specified in section 15-B of the Income Tax Act, 1922 (XI of 1922), the rate of Pakistan super tax otherwise pavable with respect to dividends paid by such company to such corporation shall be reduced by 1 anna in the rupee. Double taxation pact with The Netherlands: SC turns down SHC’s judgement on applicability of Article 7 or Article 12 As per the Supreme Court, the matter in issue for the Appellants is that the impugned judgment and orders have misinterpreted Article VI of the Convention mainly that the tax is to be reduced by 1 anna in the rupee which is 1/16th of the tax rate which comes to 0.0625% and not 6.25%. “So, as per their contentions, it means that from the given rate of 15% a rebate of 0.0625% has to be subtracted, that is 14.0625%. This, they argue, is the applicable rate,” read the judgement. The SC said that after examining the given Article as well as the impugned judgment and orders wherein two aspects are very clear. “Firstly, Article VI applies to the rate of tax and not on the amount of the…