[Title] Convention between Japan and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Protocol

At the signing of the Convention between Japan and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (hereinafter referred to as "the Convention"), the Government of Japan and the Government of the Islamic Republic of Pakistan have agreed upon the following provisions, which shall form an integral part of the Convention.

1. With reference to paragraph 3 of Article 7 of the Convention:

It is understood that no deduction shall be allowed in respect of amounts paid or charged (other than reimbursement of actual expenses) by a permanent establishment of an enterprise to the head office of the enterprise or any other offices thereof, by way of:

(a) royalties, fees or other similar payments in return for the use of patents or other rights;

(b) commission, for specific services performed or for management; and

(c) interest on money lent to the permanent establishment; except where the enterprise is a banking institution.

2. With reference to paragraph 2 of Article 8 of the Convention:

It is understood that the provisions of the paragraph shall not be interpreted as restricting the powers of taxation of the Provincial Governments in Pakistan.

3. Where, pursuant to any provision of the Convention, a Contracting State reduces the rate of tax on, or exempts from tax, income of an individual who is a resident of the other Contracting State and under the laws in force in that other Contracting State that individual is subjected to tax by that other Contracting State only on that part of such income which is remitted to or received in that other Contracting State, then the reduction or exemption shall apply only to so much of such income as is remitted to or received in that other Contracting State.

4. Nothing in the Convention shall prevent Japan from imposing tax at source, in accordance with its domestic law, on any income and gains derived by a person pursuant to a sleeping partnership (Tokumei Kumiai) contract or other similar contract.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Protocol.

DONE in duplicate at Islamabad this twenty-third day of January, 2008, in the English language.

For the Government of Japan:

Seiji Kojima

For the Government of the Islamic Republic of Pakistan:

Abdullah Yusuf