Non-residents
Non-residents are taxed only on income from Pakistan. Royalty, fees and shipping income are taxed under a final regime on the gross amount.
Where it applies
- Individuals in Pakistan for less than 183 days who don't meet the citizen tests, and foreign companies
How it works, step by step
The section of law behind each step is shown beside it.
- 1Check residences.82
An individual is resident if in Pakistan for 183 days or more, or is a citizen who spent no more than 182 days in any other country, or who is not a tax resident of any other country.
- 2Find the sources.101
Identify Pakistan-source income under the source rules.
- 3Apply the regimes.6, Div IV
Royalty and fees for technical services: 15% gross, final. Other s.6 payments: 10%. PE income: the NTR.
- 4Treaty reliefs.107
Apply the lower treaty rate with a tax residency certificate.
Rates and rules
| Case | Rate / rule | Law |
|---|---|---|
| Royalty / fees for technical services / offshore digital services | 15% of gross | Div IV |
| Other s.6 payments | 10% | Div IV |
| Shipping / air | 8% / 3% of gross | Div V |
Worked example
A UK company paid Rs 10 million in Pakistan-source royalty: Rs 1.5 million is deducted as final tax, unless the treaty gives a lower rate.
Points to watch
- Residents are taxed on worldwide income, with a credit for foreign tax (s.103).