Foreign Tax Relief and Tax Treaties for Individuals

foreign tax relief

Foreign Tax Relief
If a person has paid foreign income tax in connection with this salary, then the salary of foreign resources received by a resident is exempt from tax in Pakistan.

Where a resident taxpayer receives foreign sources of income in exchange for taxes in Pakistan, the taxpayers have paid foreign taxes in this regard taxpayers are allowed to pay an amount equal to the tax less than the foreign income tax or an amount equal to the amount of Pakistan tax payable in respect of this income

Foreign sources of income are an exception for non-citizens of Pakistan if the person is a resident only for employment and no one has been in Pakistan for more than three years. This exception does not apply to businesses established in Pakistan and income from foreign sources brought or received in Pakistan.

Tax treaties
Tax treaties represent an important aspect of international tax law in many countries. A tax treaty is a two-party agreement between two countries to resolve issues related to double taxation on the passive and active income of each of its citizens. When an individual or business invests in a foreign country, a problem may arise as to which country will tax the investor’s earnings.

Pakistan has implemented tax treaties with more than 66 countries which are following:

Sr.No Title
1 Bulgaria
2 Hong Kong
3 Brunei Darussalam
4 Czech Republic
5 Nepal
6 Kyrgyz Republic
7 Ukraine
8 Spain
9 Serbia
10 Yemen
11 Vietnam
12 United States of America
13 Uzbekistan
14 United Arab Emirates
15 United Kingdom.
16 Turkmenistan
17 Tunisia
18 Turkey
19 Tajikistan
20 Thailand.
21 Saudi Arabia
22 Syria
23 Switzerland
24 Sweden.
25 Sri Lanka
26 South Africa.
27 Singapore.
28 Romania.
29 Qatar.
30 Portugal
31 Poland
32 Philippines
33 Oman.
34 Norway.
35 Nigeria
36 Netherlands.
37 Morocco
38 Mauritius
39 Malta
40 Malaysia.
41 Lebanon.
42 Libya
43 Korea
44 Kazakhstan
45 Kuwait
46 Jordan
47 Japan

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