According to the Express Tribune, the Federal Board of Revenue (FBR) has reversed the 17 percent sales tax imposed on imports by foreign diplomatic missions and United Nations (UN) organisations last month through the mini-budget.
The 17 percent sales tax imposed on President Arif Alvi, Prime Minister Imran Khan, and other top members of the government in January has also been lifted, according to directives distributed by the tax machinery on 4 February. Miscellaneous sales tax on food goods sold in bakeries and restaurants, on the other hand, has been preserved.
The FBR instructions explained, “On the request made by the Ministry of Foreign Affairs, the issue of tax exemption on imports by diplomats, diplomatic missions, and other privileged persons has been reviewed, and consequently, sales tax shall not be collected on such imports covered under PCT headings 99.01, 99.02, and 99.06 of Chapter 99 of the First Schedule to the Customs Act, 1969.”
Despite concerns from the Foreign Office (FO) that other nations may take Pakistan to the International Court of Justice for charging taxes on purchases by foreign diplomatic missions and UN organisations, the tax authority backed the sales tax repeal. The UN Privileges and Immunities Act of 1948 protects things imported by different UN agencies, whereas the Diplomatic and Consular Privileges Act of 1972 protects goods imported by diplomats, embassies, and consulates.
The FO told the FBR that its decision to revoke tax protection for foreign embassies and envoys was in violation of the 1961/1972 Vienna Convention on Diplomatic Relations, and that other countries might react similarly.
Despite the Foreign Office’s worries that other countries would take Pakistan to the International Court of Justice for taxing purchases by foreign diplomatic missions and UN organisations, the tax authorities endorsed the sales tax repeal. The United Nations Privileges and Immunities Act of 1948 covers items imported by UN agencies, whereas the Diplomatic and Consular Privileges Act of 1972 protects commodities imported by diplomats, embassies, and consulates.
The FO notified the FBR that its decision to abolish tax exemptions for foreign embassies and envoys was in contravention of the Vienna Convention on Diplomatic Relations, which was signed in 1961 and updated in 1972, and that other nations may follow suit.
