Under the current tax system, foreign tax credit is limited to the amount of Pakistani tax that would be payable on the foreign-source income. Any tax credit or part of a tax credit allowed for a tax year that is not credited is to be refunded, carried back to the preceding tax year, or carried forward to the following tax year. A credit is to be allowed only if the foreign income tax is paid within two years after the end of the tax year in which the foreign income to which the tax relates was derived by the resident taxpayer.

Below is a summary of the available methods for various income tax streams based on domestic law.

Royalty Copyright	OC
Capital Gains	OC
Dividends	OC
Interest	OC
Royalty Patent	OC
Sales	OC
Service Management	OC
Service Technical	OC
Royalty Trademark	OC

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment. Four abbreviations are used for the type of foreign tax credit available:

NC means no credit but foreign withholding taxes can be deducted.
OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
ND means no credit and no deduction for any foreign withholding taxes incurred.

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