Expand Confidently into Pakistan — With Full Tax Clarity

Foreign companies entering Pakistan must navigate a complex tax and compliance framework. At Usman Rasheed & Co. Chartered Accountants, we specialize in helping international businesses and non-resident investors meet all legal, financial, and regulatory tax obligations in Pakistan — swiftly, transparently, and strategically.

Whether you’re establishing a Private Limited Company, opening a branch or liaison office, or seeking cross-border tax efficiency, our experts handle everything from SECP and FBR registration to VAT, WHT, dispute resolution, and profit repatriation compliance.

Corporate Tax Structure in Pakistan (For Foreign Companies)

Foreign-owned entities in Pakistan must comply with the Federal Board of Revenue (FBR) regulations. Here’s an overview of applicable taxes:

• Corporate tax is levied at 29% of net profit or 1.25% of turnover, whichever is higher.
• Capital gains tax is applied at variable rates based on asset type and holding period.
• Sales tax (GST) is charged at 18% on goods, and between 13% to 16% on services depending on the province.
• Withholding tax (WHT) applies on dividends (15% to 25%), royalties (15%), and technical services (15%).
• Customs duties range from 0% to 20% based on the classification of goods.
• Profit repatriation is fully allowed under State Bank regulations.
• Special Economic Zone (SEZ) investors benefit from tax holidays, customs exemptions, and income tax relief.
• Double taxation relief is available under treaties with more than 60 countries.

Residency-Based Taxation: Who Pays What?

Pakistan follows a residency-based taxation model that affects both companies and individuals:

• Companies incorporated in Pakistan or managed from within the country are considered tax residents.
• Foreign branches or permanent establishments operating in Pakistan are subject to local tax on Pakistan-source income.
• Individuals who spend 183 days or more in Pakistan during a tax year are classified as tax residents.
• Associations of Persons (AOPs) and partnerships are considered residents if control and management is exercised in Pakistan.

We help determine and structure your residency status to ensure proper classification and avoid penalties.

What Income is Taxable in Pakistan for Foreign Businesses?

Foreign companies are only taxed on income sourced from within Pakistan. This includes:

• Commercial and operational profits generated within the country.
• Dividends, royalties, interest, and technical service fees received from Pakistani entities.
• Capital gains on sale of shares, real estate, or other business assets.
• Rental income and property earnings.
• Income earned through a local branch, project office, or permanent establishment.

We manage income attribution, withholding compliance, and full-spectrum tax reporting.

Expatriate Taxation & Visa Compliance

Foreign professionals employed in Pakistan must comply with both immigration and tax laws. We manage comprehensive expat tax and visa compliance for foreign companies.

• A valid work visa is mandatory for all expatriates.
• Income earned abroad is tax-exempt for up to three years unless remitted to Pakistan.
• Foreign employees working under government-aid programs or technical assistance agreements may qualify for tax exemptions.
• Personal income tax rates for expatriates follow a progressive structure, ranging from 0% to 35%.

We also manage payroll processing and cross-border income declarations for expatriate teams.

Indirect Taxation: WHT, VAT, and Customs Advisory

Withholding Tax (WHT):

• Dividends are taxed between 15% to 25%.
• Royalties and technical service fees are taxed at 15%, with reductions available under Double Taxation Treaties.
• Cross-border payments for management or consultancy services are also subject to applicable WHT rates.

Sales Tax / VAT (GST):

• 18% on goods across Pakistan.
• Services are taxed at 13% to 16% depending on the province.
• Businesses must register with FBR and obtain a STRN for GST compliance.

Customs Duties:

• Duty ranges between 0% and 20% based on product classification.
• Companies operating in SEZs benefit from full customs and import tax exemptions.

We advise foreign clients on classification, duty structures, VAT registration, and indirect tax planning.

Tax Dispute Resolution & Compliance Support

We help international businesses manage FBR audits, respond to tax inquiries, and resolve disputes efficiently.

• Full preparation and representation during FBR audits and assessments.
• Filing and managing appeals at the Commissioner Inland Revenue, Appellate Tribunal, and higher courts.
• Alternative Dispute Resolution (ADR) options are available for faster and confidential settlements.
• Tax relief claims under double taxation agreements are fully supported.

Our team ensures timely and strategic resolution of all tax issues faced by foreign businesses in Pakistan.

Why International Companies Trust Usman Rasheed & Co.

• We’ve supported over 2,000 foreign companies with corporate tax, VAT, customs, and compliance advisory.
• Our International Desk is dedicated to helping non-resident investors set up and scale businesses in Pakistan.
• Company registration, FBR onboarding, and full tax compliance are completed within 5 to 7 working days.
• We have offices in Islamabad, Lahore, Karachi, Quetta, Peshawar, and Gilgit.
• Our team includes international tax experts, litigation specialists, and regulatory consultants.

We are your trusted tax and compliance partner in Pakistan.