CAF-2 · Chapter 13 · Question 13 of 15
Mr. A, a citizen of Pakistan, left the country on 15 August 2025 (Tax Year 2026) to take up a job in Saudi Arabia and remained abroad for the rest of the tax year. He earned a salary of Rs. 3,000,000 in Saudi Arabia during Tax Year 2026. There is no income tax in Saudi Arabia. What is the tax treatment of this salary in Pakistan?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) It is exempt from tax because he left Pakistan during the tax year and remained abroad for the remainder of that year.
Explanation
Where a citizen of Pakistan leaves Pakistan during a tax year and remains abroad during that tax year, any foreign-source salary earned by him outside Pakistan (only during that tax year) shall be exempt from tax, completely regardless of whether foreign tax was paid or not.
More Foreign Source Income of a Resident Person MCQs
- Q15When calculating foreign-source income and adjusting losses, how is a foreign-source speculation business treated?
- Q1Under the Income Tax Ordinance, 2001, how are the deductible expenditures relating to foreign-source income treated for a resident person?
- Q2If a resident taxpayer derives foreign-source income from multiple heads (e.g., Business and Property), how must this income be computed?
- Q3What is the maximum amount of Foreign Tax Credit (FTC) a resident taxpayer can claim under Section 103?
- Q4For the purpose of calculating the Foreign Tax Credit, how is the "Pakistan tax payable" in respect of foreign-source income determined?