Bilateral income tax treaties between countries generally treat taxpayers differently than under their domestic tax rules where such treaties are applicable.

Canada has bilateral tax treaties with a number of countries. These treaties normally take precedence over Canadian income tax laws and the taxation laws of the corresponding countries.

Bilateral tax treaties are usually applicable where a person is resident of one or both the treaty countries and has income or assets in one or both corresponding countries.

A bilateral tax treaty can be double-edged sword. On one hand, it can give you relief from double taxation. On the other, it allows the contracting countries to exchange your information to detect and prevent tax evasion and fraud.

It often becomes a matter of knowing the taxation systems and rules of both the contracting countries as well as the bilateral tax treaty regime to do your taxes accurately in each of the treaty countries.

Doing your taxes right where bilateral tax treaties come into play can therefore be very complex for you to handle yourself.

You may wish to seek advice from lawyer(s) and tax experts who have expertise in bilateral tax treaties and the tax laws of Canada.

Canada has an income tax treaty with Pakistan for the avoidance of double taxation and the prevention of tax evasion and fraud.

Under the tax laws of Canada and Pakistan, you can be a tax resident of both countries. This can be due to several reasons, including where you and your dependents live, or earn income, or have a house (or other assets like bank account, etc.)

This means that your income taxation will be governed by the tax laws of Canada and Pakistan as well as by the Canada-Pakistan tax treaty.

If you are filing taxes in both countries, the treaty can be very beneficial to you as it can get you substantial tax relief in one of the countries.

But if you are not (or inaccurately) filing your taxes in one or both the countries, the treaty can be very problematic for you as it can cause you tax troubles, including penalties, fines, and prison time.

The Canada-Pakistan tax treaty specifically provides for secret exchange of information between their competent authorities to detect and prevent tax evasion and fraud by the residents of either country who fall under the treaty regime.

If you are a Canadian or Pakistani resident with income, assets, or dependents in the other country, you can consult a tax lawyer or expert with expertise in international taxation to know your tax rights and obligations under the treaty regime.

Our tax lawyer Dr. Abbas, Ph.D. provides income tax advice and services respecting the Canada-Pakistan tax treaty, Canadian income tax, and Pakistan income tax (for which he is certified by the Federal Board of Revenue (FBR) of Pakistan).

Tax advise and services on Pakistan income tax in Canada are offered by Dr. Abbas as FBR-certified income tax practitioner.

Call us for free initial consultation and further details.