Expatriate tax ebook - Pakistan

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Expatriates who intend to work in Pakistan are required to apply for a visa before taking up employment. Grant Thornton Pakistan, recommends that the employment contract and benefit package of expatriates be structured in a tax friendly manner and shared with us before these are submitted to the Board of Investment for approval.

Employment visas
Local businesses can sponsor expatriates for issuance of a visa, which can be issued for a period of up to five years or for the duration of the applicant's passport, whichever is earlier. Individuals seeking sponsorship need to demonstrate that he/she:

has the necessary skills to match the vacancy,
will be paid in accordance with the company rules, and
meets health and character requirements.

The expatriate’s spouse or partner may also be issued with a visa along with the main applicant.

Tax year
The Pakistan 'tax year' generally ends on 30 June each year for the computation and determination of taxable salary and tax liability on salary income.

Tax returns and compliance
An salaried individuals are required to file the tax return by 31 August each year.

Income tax rates - 2011

Taxable Income (PKR)	Tax Payable (%)
Up to 300,000	0
300,000 - 350,000	0.75
350,000 - 400,000	1.50
400,000 - 450,000	2.50
450,000 - 550,000	3.50
550,000 - 650,000	4.50
650,000 - 750,000	6.00
750,000 - 900,000	7.50
900,000 - 1,050,000	9.00
1,050,000 - 1,200,000	10.00
1,200,000 - 1,450,000	11.00
1,450,000 - 1,700,000	12.50
1,700,000 - 1,950,000	14.00
1,950,000 - 2,250,000	15.00
2,250,000 - 2,850,000	16.00
2,850,000 - 3,550,000	17.50
3,550,000 - 4,550,000	18.50
More than 4,550,000	20.00

In cases where the income of a taxpayer marginally exceeds the maximum limit of a slab in the above table, the income tax payable would be the tax payable on maximum of that slab plus amount equal to:

20% of the amount by which total income exceeds the said limit where the total income does not exceed Rs.550,000
30% of the amount by which the total income exceeds in each slab but total income does not exceed Rs.1,050,000
40% of the amount by which the total income exceeds in each slab but total income does not exceed Rs.2,250,000
50% of the amount by which the total income exceeds in each slab but total income does not exceed Rs.4,550,000
60% of the amount by which the total income exceeds in each slab but total income exceeds Rs.4, 550,000.

Sample income tax calculation

Tax year 2011	(Amounts in PKR)
Basic salary	1,500,000
Medical allowance	150,000
Special allowance	200,000
(other than conveyance and entertainment)
Total salary	1,850,000
Less
Medical allowance exempt up to 10%	(150,000)
Special allowance exempt	(200,000)
Taxable income	1,500,000
Tax at 12.5%	187,500
Total tax	187,500

Information about Pakistan:

tax planning opportunities

Last updated 8 September 2010

This information has been provided by Grant Thornton Pakistan, a member firm of Grant Thornton International Ltd, and is for informational purposes only. Neither Grant Thornton Pakitan nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.

Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.
Disclaimer

Contact us

For further information on expatriate tax services in Pakistan please contact Anjum Ata Sheikh.

Related websites

Federal Board of Revenue

Related publications

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