There is a saying that about life there are only two certainties; death and taxes. But for Pakistani residents who are earning rental income or earning yield from capital investments in the UAE, tax is not a problem anymore! You heard it right, invest in UAE, earn, and you won’t have to pay taxes.
The federal institute of revenue; the Appellate Tribunal Inland Revenue [ATIR] gave a key ruling that has made the matter official that such an income that is earned through investments in the UAE and UK shall not be taxed. The decision, based on Pakistan’s tax treaties with the UAE and UK, clarifies that income from these countries is only taxable where it is earned, not in Pakistan.
The case in point was a Pakistani taxpayer who declared foreign income as exempt in their annual tax return. Although the Pakistani tax authorities argued against it but ATIR sided with the tax payer and emphasized that in the presence of tax treaties that assign taxing rights to the source countries, such income cannot be taxed in Pakistan.
This decision aligns with previous rulings, reaffirming that rental income and capital gains from the UAE and UK are exempt from taxation in Pakistan.
