WASHINGTON: The United States said Friday that it had suspended tax exemption privileges enjoyed by Pakistani diplomats due to parallel disputes with Islamabad in the latest dust-up between the countries.
Under the 1961 Vienna Convention, diplomats around the world do not pay taxes in countries where they are posted, with embassy staffers in Washington routinely flashing State Department-issued exemption cards when dining out or shopping.
The State Department said it withdrew tax exemptions for Pakistani diplomats and their dependents as of May 15, citing pending tax issues faced by US diplomats in Pakistan.
“The issue is the subject of ongoing bilateral discussions, and we hope to be able to resolve the issue and restore the tax privileges,” a State Department spokesman said.
While the latest issue was not linked to politics, the United States last year restricted Pakistani diplomats in Washington from traveling outside a 25-mile (40-kilometer) radius around the US capital after charging that Pakistani police routinely harass US diplomats, including through time-consuming traffic stops.
The Pakistani embassy in Washington said that 22 officials enjoyed the tax exemption.
In a statement, it also said that discussions were underway “on the basis of the principle of reciprocity.”
Pakistan is a Cold War ally of the United States but the two countries have had bumpy relations in recent years, with President Donald Trump cutting off some $300 million in military aid, saying Islamabad had failed to curb Islamist extremists who stage attacks in Afghanistan and India.
Pakistan has tried to revive ties by using its contacts with the Taliban to facilitate negotiations with the Trump administration, which wants to withdraw troops from Afghanistan and end America’s longest war.
US pulls tax exemption from Pakistani diplomats
US pulls tax exemption from Pakistani diplomats
- Withdraws privileges citing pending tax issues faced by US diplomats in Pakistan
- Under Vienna Convention, diplomats do not pay taxes in countries where they are posted
Pakistan raises fuel prices by Rs55 per liter as Middle East conflict drives oil surge
- Government says adequate fuel stocks in place despite global energy shock
- Oil prices jump from about $78 to over $106 per barrel amid regional conflict
ISLAMABAD: Pakistan on Friday increased petrol and diesel prices by Rs55 ($0.20) per liter each as escalating conflict in the Middle East sent global oil prices sharply higher and disrupted energy supply routes, officials said.
Global oil markets have been rattled since coordinated strikes by the United States and Israel against Iran began last week, triggering retaliatory attacks across the region, raising fears of disruption to key energy shipping routes and pushing petroleum prices sharply upward.
The price adjustment in Pakistan was announced after a joint press conference by Finance Minister Muhammad Aurangzeb, Deputy Prime Minister and Foreign Minister Ishaq Dar and Petroleum Minister Ali Pervaiz Malik, who said the government was monitoring international energy markets and domestic supply conditions amid the crisis.
“So, the decision we have made by changing the levy a little bit is that we are going ahead with increasing the price of both fuels, petrol and diesel, by Rs55 ($0.20),” Malik told reporters.
“And as soon as this matter settles, we will revise the prices downward with the same speed and take steps on how to increase people’s income and purchasing power.”
He said Pakistan entered the crisis with “comfortable energy reserves” due to earlier planning but rising global prices had forced the government to adjust domestic fuel rates to maintain supply continuity.
He said international petrol prices had climbed from roughly $78 per barrel on March 1 to around $106.8 per barrel, while diesel prices had risen to about $150 per barrel.
Malik added that the government had taken steps to minimize the burden on consumers, noting diesel plays a critical role in agriculture, transportation and public mobility.
Malik also warned that authorities would take strict action against anyone attempting to hoard fuel or manipulate supply for profiteering.
The minister said Pakistan was working with international partners to secure additional energy supplies, including arrangements with Saudi Aramco and the use of Pakistan National Shipping Corporation vessels to transport crude oil imports.
Finance Minister Aurangzeb said a high-level government committee formed by Prime Minister Shehbaz Sharif had been meeting daily to review developments in global petroleum markets and their potential impact on Pakistan’s economy.
“Pakistan currently maintains adequate energy stocks and macroeconomic stability,” Aurangzeb said, adding that the government’s response was based on preparedness rather than panic.
He said the committee, which includes senior ministers, the governor of the State Bank of Pakistan and other officials, was assessing short-, medium- and long-term implications of the crisis for inflation, foreign exchange reserves and broader economic indicators.
Deputy PM Dar said the regional conflict had significantly disrupted global energy markets, with international petroleum prices rising by as much as 50–70 percent in recent days.
The deputy prime minister added that Pakistan was also engaged in diplomatic efforts aimed at de-escalating tensions and restoring stability in the region.
Petroleum prices will now be reviewed more frequently, potentially on a weekly basis, and any reduction in global oil prices would be passed on to consumers.
Pakistan, which relies heavily on imported fuel to meet its energy needs, is particularly vulnerable to global oil price shocks that can quickly feed into inflation and pressure the country’s external accounts.
