The Federal Board of Revenue (FBR) has reaffirmed that income tax exemptions will continue for diplomats and individuals working for the United Nations (UN) during the 2024-25 tax year.
The recent update to the Income Tax Ordinance, 2001, ensures that these exemptions remain in place, providing clarity on the tax-free privileges available to diplomats, UN personnel, and certain foreign government officials.
According to the FBR’s revised guidelines, Section 42 of the Income Tax Ordinance outlines the tax exemptions granted to diplomats and individuals associated with the UN. These exemptions are deeply rooted in international agreements and national legislation, ensuring that Pakistan complies with its commitments to diplomatic immunity and international cooperation.
Tax Exemptions for Diplomats and UN Personnel
Section 42(1) of the Ordinance specifies that individuals entitled to privileges under the Diplomatic and Consular Privileges Act, 1972 (IX of 1972), will continue to enjoy income tax exemptions. This applies to diplomats accredited to Pakistan, ensuring their income is tax-free, as per international diplomatic norms.
Similarly, Section 42(2) grants tax exemptions to individuals entitled to privileges under the United Nations (Privileges and Immunities) Act, 1948 (XX of 1948). UN employees working in Pakistan can take advantage of this exemption, safeguarding their income from taxation, just as the Act dictates.
Additionally, Section 42(3) addresses the tax status of former UN employees. Pakistani citizens who receive pensions due to their previous employment with the UN or its specialized agencies, including the International Court of Justice, are also exempt from paying income tax on their pensions, provided their salary during employment was exempt from tax under the Income Tax Ordinance.
Tax Exemptions for Foreign Government Officials
In a related update, the FBR reiterated that foreign government officials working in Pakistan are also eligible for tax exemptions under Section 43 of the Ordinance. This provision allows tax-free salaries for employees of foreign governments, provided certain conditions are met:
1. The employee must be a citizen of the foreign country and not a Pakistani citizen.
2. The services performed must be of a nature similar to those provided by Federal Government employees stationed abroad.
3. The foreign government must offer a reciprocal tax exemption to Pakistani government employees working in that country.
This exemption underscores Pakistan’s commitment to fostering positive diplomatic relations and ensuring equitable treatment for foreign officials.
In summary, the FBR’s confirmation of tax exemptions for diplomats, UN employees, and foreign government officials ensures that Pakistan continues to honor its international obligations while providing clarity and certainty to individuals working in these crucial sectors.
