Pakistani Income Tax: FBR, NTN and Departure Procedures
Pakistan's Income Tax Ordinance 2001 (ITO 2001, as amended) is administered by the FBR (Federal Board of Revenue — fbr.gov.pk) and provincial Revenue Authorities (for sales tax). 2026 income tax rates: Salaried individuals: 0% (up to PKR 600,000/year); 5% (PKR 600,001–1,200,000); 15% (PKR 1,200,001–2,200,000); 25% (PKR 2,200,001–3,200,000); 30% (PKR 3,200,001–4,100,000); 35% (above PKR 4,100,000/year). Non-salaried (business/professional) individuals: higher rates — top rate 45% above certain thresholds. Note: Finance Act rates adjusted annually — verify at fbr.gov.pk. Super Tax: additional Super Tax (introduced 2022) of up to 10% on high-income individuals and companies — verify current thresholds. IRIS (Inland Revenue Information System) portal: FBR online filing system. Annual return: due September 30 for the tax year ending June 30. NTN (National Tax Number): Pakistan's tax ID. Required for property transfers, bank accounts above PKR 500,000, vehicle registration, and many other transactions. On departure: file a final income tax return for the departure year. Obtain a Tax Clearance Certificate (TCC) from the Commissioner of Inland Revenue if required — necessary for certain asset transfers and some visa/travel applications. Active filer status: Pakistan maintains an Active Taxpayers List (ATL) — being on the ATL provides lower withholding tax rates on banking transactions, property, and vehicles. Non-residents: withholding tax at reduced rates on Pakistani-source income under applicable DTAs. Tax residency: Pakistanti tax residency if present in Pakistan for 183+ days in a tax year (July 1–June 30).
EOBI, Voluntary Pension Scheme and Gratuity on Departure
EOBI (Employees' Old-Age Benefits Institution — eobi.gov.pk): mandatory contributory social security for formal sector employees of companies with 5+ employees. Contributions: employee 1% of minimum wage; employer 5% of minimum wage. EOBI pension: requires minimum 15 years of contribution (or age 60 for old-age pension, age 55 for early pension). EOBI does not provide a lump-sum refund of contributions on departure — contributions create a future pension right only. EOBI pension: PKR-denominated monthly pension payable to eligible pensioners outside Pakistan (verify payment mechanism with EOBI). VPS (Voluntary Pension System — under SECP — secp.gov.pk): privately managed voluntary pension accounts introduced under the Voluntary Pension System Rules 2005. Contributions: voluntary, up to 20% of annual income (tax-deductible under ITO 2001 Section 63). VPS individual account: belongs to you — portable and withdrawable. Withdrawal: VPS funds can be withdrawn after age 60 (full withdrawal); early withdrawal possible with income tax implications. On emigration: VPS account may be accessible with penalty/tax implications for early withdrawal — contact your VPS Fund Manager (such as National Investment Trust, MCB Funds, Alfalah GHP). Gratuity (under Standing Orders Ordinance 1968): mandatory for employees of establishments covered by the ordinance. Gratuity: payable on resignation or departure after qualifying service. Rate: as per employment contract/service rules — minimum 30 days' wages per year of service for qualifying employees. Provident Fund (Recognised Provident Fund — under ITO 2001 Third Schedule): employer-administered EPF where applicable. Withdrawal: payable on resignation/departure. Tax: exempt from income tax up to prescribed limits for approved funds.
PKR Currency Depreciation and SBP Transfer Regulations
Pakistan's rupee (PKR) has experienced significant depreciation. Rate history: approximately PKR 160/USD in January 2022; PKR 280–300/USD by 2023–2024 (verify current rate at sbp.org.pk — State Bank of Pakistan). Post-IMF programme (2023–present): Pakistan has been under an IMF Extended Fund Facility since 2023 — PKR has partially stabilised but remains vulnerable. Foreign exchange controls: SBP maintains significant controls over foreign exchange. Outward remittances: for personal savings, FBR Tax Clearance is often required for large transfers. Overseas Pakistanis (Non-Resident Pakistanis — NRPs): SBP encourages inward remittances via the Roshan Digital Account (RDA) programme — RDA accounts allow NRPs to hold USD, GBP, or EUR accounts in Pakistani banks with relatively free repatriation. For departing residents: USD accounts at Pakistani banks are critical to avoid PKR depreciation on savings. Major Pakistani banks: HBL (Habib Bank Ltd), MCB Bank, UBL (United Bank Ltd), Allied Bank, Bank Alfalah, Meezan Bank (Islamic banking) — all provide international SWIFT transfers. Documentation for large transfers: NTN, FBR tax clearance, source-of-funds documentation, SBP approval for amounts above limits. EOBI/provident fund proceeds: received in PKR — convert to USD at your bank before international transfer. Wise from Pakistan: verify current PKR support — Wise may have limited PKR direct transfer functionality; bank wire via USD account is the standard route.
Pakistan-UK DTA and British Pakistani Tax Planning
Pakistan-UK DTA (1987): one of Pakistan's most important bilateral agreements, given the approximately 1.6 million-strong British Pakistani community. UK tax implications for British Pakistanis: UK taxes residents on worldwide income. Pakistani rental income received by UK residents: withholding at source in Pakistan; credit on UK self-assessment under DTA Article 23. Pakistani dividends: DTA withholding rates (typically 15% for portfolio dividends) — credit in UK. Pakistan-UAE DTA: in force — covers the large Pakistani worker community in the UAE. Pakistan-Saudi Arabia DTA: in force. Pakistan-Germany DTA: in force. Pakistan-China DTA: in force (relevant for growing China-Pakistan Economic Corridor — CPEC — related business activity). No Pakistan-USA income tax treaty: US persons with Pakistani-source income use Form 1116 FTC; FBAR for Pakistani bank accounts above USD 10,000 aggregate. FATF: Pakistan was removed from the FATF grey list in October 2022 after implementing anti-money laundering reforms. This has reduced compliance friction for Pakistani international banking transactions.