Pakistan

{"ftc_utility":"high","fbar_trigger_notes":"US expats in Pakistan with local bank accounts exceeding $10,000 in aggregate at any point during the year must file FinCEN 114 (FBAR). Pakistani bank accounts are reportable. Pakistan participates in the Common Reporting Standard (CRS) and exchanges financial account information internationally, which increases IRS visibility into local accounts.","ftc_utility_reason":"Pakistan taxes residents on worldwide income at rates up to 35%. US citizens resident in Pakistan who pay Pakistani income tax on earned income can use the Foreign Tax Credit to offset their US tax liability dollar-for-dollar on the same income. Given Pakistan's top rate of 35% exceeds the US top marginal rate in many scenarios, FTC can fully shelter US tax on Pakistani-source income. FEIE and FTC cannot both apply to the same income, so taxpayers must choose the more beneficial approach.","presence_day_count_notes":"Pakistan does not impose strict visa-based day limits that would prevent accumulation of 330 qualifying days abroad for FEIE purposes. US citizens resident in Pakistan can qualify under either test. Pakistan defines tax residency as presence for 183 days or more in a tax year (July 1 to June 30). The country has a Level 3 (Reconsider Travel) State Department advisory due to terrorism and security risks, which may affect practical ability to maintain bona fide residence in certain regions.","typical_qualifying_method":"either","housing_exclusion_available":true,"physical_presence_test_applies":true,"estimated_housing_exclusion_usd":18000,"local_tax_rate_on_earned_income":0.35,"bona_fide_residence_test_applies":true}

{"pension_income":{"notes":"Pakistan provides a full exemption for pension income received by government employees and armed forces retirees under the Income Tax Ordinance 2001. Private-sector pensions approved under Pakistani law also receive favorable treatment. Foreign pensions received by Pakistani residents are taxable as foreign-source income at normal progressive rates unless exempted by specific provision. Commuted pension (lump sum) from an approved fund is exempt up to specified limits.","tax_rate":null,"locally_taxed":false},"social_security":{"notes":"No US-Pakistan totalization or income tax treaty exists. US Social Security benefits received by a Pakistani tax resident are technically subject to Pakistani income tax as foreign-source income. Practically, enforcement depends on individual disclosure. No treaty relief is available.","locally_taxed":true,"treaty_protection":false},"roth_distributions":{"notes":"No US-Pakistan tax treaty exists. Roth IRA distributions, while tax-free in the US, are not recognized as a special category under Pakistani law. A Pakistan tax resident receiving Roth distributions would in principle owe tax under worldwide income rules, though the practical enforcement of this is limited for amounts that have no reportable character under US information exchange. Legal position remains that they are taxable as foreign income.","locally_taxed":true},"us_401k_ira_distributions":{"notes":"Pakistan and the US do not have a bilateral income tax treaty. Distributions from US 401(k) or IRA accounts received by a Pakistan tax resident would be treated as foreign-source income. Pakistan taxes residents on worldwide income, so these distributions are subject to normal progressive income tax rates up to 35%. No treaty protection exists to prevent double taxation beyond the foreign tax credit mechanism available under Pakistani domestic law.","tax_rate":0.35,"locally_taxed":true,"treaty_protection":false}}

{"rate":0.15,"notes":"Pakistan taxes capital gains on securities at rates depending on holding period, ranging from 15% for short-term to lower rates for longer-held assets. Immovable property gains are taxed separately under a withholding/advance tax regime at rates between 3% and 15% depending on holding period and filer status.","details":{"tax_type":"Capital Gains Tax","country_name":"Pakistan","country_iso_code":"PAK","source_references":["PwC Worldwide Tax Summaries - Pakistan","Federal Board of Revenue Pakistan (FBR)","Finance Act 2023"],"last_verified_date":"2026-06-03","general_description":"Pakistan imposes capital gains tax on gains from disposal of securities (shares, mutual fund units, debt instruments) and immovable property. Securities gains are taxed at rates based on holding period. Immovable property is subject to advance tax on gross consideration at the time of transfer, which may be treated as final tax for certain filers. Gains on assets held more than 4 years are generally exempt or attract reduced rates.","corporate_capital_gains":{"rate":0.29,"tax_treatment":"Corporate gains on securities and property are generally taxed as part of business income at the standard corporate tax rate of 29%. Specific withholding tax rules apply to property transactions."},"individual_capital_gains":{"rate":0.15,"tax_treatment":"Securities held less than 1 year: 15%. Securities held 1-2 years: 12.5%. Securities held 2-4 years: 10%. Securities held more than 4 years: 0%. Immovable property: advance tax at 3%-15% depending on holding period and filer/non-filer status, generally treated as final tax. Non-filers face higher rates."}}}

{"notes":"Dividends paid by Pakistani companies are subject to a withholding tax of 15% for resident individuals, which is generally treated as a final tax. Non-filers face a higher rate of 30%. Dividends from inter-corporate holdings may attract a reduced 25% rate or exemptions under specific conditions.","rates":[{"rate":0.15,"type":"withholding","notes":"Standard rate for resident filers; treated as final tax on dividend income"},{"rate":0.3,"type":"withholding","notes":"Rate applicable to non-filers of tax returns"},{"rate":0.075,"type":"withholding","notes":"Reduced rate applicable to dividends received from mutual funds in certain cases"}]}