EXPLANATORY NOTE OF SRO. 767(1)/2008
Pakistan source income of International Finance Corporation (IFC) was exempt from tax in accordance with the provisions of proviso to section 54 of the Income Tax Ordinance, 2001. The said proviso was omitted wide the Finance Act, 2008. IFC, accordingly approached the Federal Government and claimed that in view of the agreement of 1955 and the IFC Act, 1956, the Pakistan source income of IFC is exempt from tax. The claim has been considered and found correct, accordingly, Part I of the Second Schedule to the Income Tax Ordinance, 2001 has been amended and a new sub-clause (xxi) in clause (66) has been inserted therein which exempts, any Pakistan source income of the IFC. Like-wise, a new clause i.e. (67) has been inserted in Part IV of the Second Schedule to the Ordinance which provides that IFC would not be required to withhold tax while making any payment under the different sections of the Ordinance.