Method for Elimination of Double Taxation
(1) The laws in force in either of the Contracting State will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention.
(2) In the case of Pakistan double taxation shall be eliminated as follows:
- Subject to the provisions of the laws of Pakistan regarding the allowances as a credit against Pakistan tax the amount of the United Arab Emirates tax payable under the laws of the United Arab Emirates and in accordance with the provision of this Convention whether directly or by deduction by a resident of Pakistan in respect of income from sources within the United Arab Emirates which has been subjected to tax both in Pakistan and United Arab Emirates shall be allowed as a credit against the Pakistan tax payable in respect of such income but in an amount not exceeding that proportion of Pakistan tax which such income bears to the entire income chargeable to Pakistan tax.
(3) In the case of United Arab Emirates the elimination of double taxation will be done according to the legislation of United Arab Emirates taking into account the general principles of avoidance of double taxation.
(4) Income which, in accordance with the provisions of this Convention, is not to be subjected to tax in a Contracting State may be taken into account for calculating the rate of tax to be imposed in that Contracting State.