Taxation issue hurts Pakistan-Greece trade

KARACHI: Pakistan’s exports to Greece have fallen by 10 percent during the last eight months, while a further decline is expected due to, what the sources call, the unresolved issue of ‘double taxation’ in shipping and air transport links with Athens.
Beside the taxation issue, the decrease in Greek demand for consumer goods is another reason for the decline in import from Pakistan, sources told Pakistan Today.
According to sources, Pakistan has serious reservations of Article 8 of the future trade agreement to be signed between the two countries, which deals with shipping and air transport. The Article, according to the sources, is likely to be misused since many ships carrying Greek flag may not be Greek owned. Though the concerned authorities in Islamabad have raised the issue with the Greek authorities, no tangible efforts have been made to resolve the issue. The Greeks have argued that the provisions of the Article were in accordance with Article 107 of the Greek constitution.
To resolve the issue, a second round of negotiations on the Agreement for Avoidance of Double Taxation was held in Athens from November 23 to 26 2009, but the matter remains unresolved, though further talks will likely to be held in Islamabad.
Earlier a team from the Federal Board of Revenue (FBR) comprising Member Policy (Direct Tax) Asrar Raouf, and Chief (International Taxes) Saeed-ur-Rahman had participated in the second round of meeting in Athens where they had negotiated over the contentious issue with Greek representatives. According to sources, the points raised by Pakistani delegation were also referred by the Athens’s concerned officials for a presidential decree that provides for the conditions that must be fulfilled before a ship was recognised as Greek. In the meeting, they said, both sides had agreed to attach a separate Protocol referring to the Greek presidential decree to the Agreement to prevent misuse of Article 8.
The FBR also sent a request for the provision of official translation of the presidential decree so that the board could obtain approval which would lead to the signing of the Agreement. According to a report submitted by the Pakistani Embassy in Athens, Pakistan exported goods worth 31.08 million euros to Greece during the period January to August 2010 against the 34.53 million euros in the corresponding period last year, a reduction of at least 10 percent.
However, it pointed out there was an overall fall in Greece imports from all countries that are Pakistan’s competitors. Greece’s imports during the same period from all over the world have also fallen by 21 percent mainly due to falling demand owing to persistent economic crisis, it said. China, Thailand and Sri Lanka have succeeded to have lesser decline in their export share in the Athens market with the decrease of only 4.8, 6.1 and 3.5 percent respectively. It is pertinent to mention that the issues related to bilateral trade were to be discussed in the meetings of Pak-Greece Joint Economic Committee (JEC). But after the third meeting of JEC which was held in Athens in 1993, no further session of the committee were held. However sources claimed that the embassies and foreign ministries of both countries are going to hold the fourth session of JEC.