US pulls tax exemption from Pakistani diplomats

WASHINGTON: The United States said Friday that it had suspended tax exemption privileges enjoyed by Pakistani diplomats in Washington 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 presented with restaurant bills or going shopping.

The State Department said it withdrew tax exemptions for Pakistani Embassy employees in Washington 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 from traveling outside a 25-mile radius around Washington after charging that Pakistani police routinely harass US diplomats, including through time-consuming traffic stops.

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.