Pakistan

Last update: 2026-06-11

PK PKR₨ English

Pros
Access to a vast, young, and cost-effective labor pool for scalable service-based ventures.
Significant tax exemptions and incentives within designated Special Economic Zones for foreign investors.
Rapidly expanding digital infrastructure and a burgeoning startup scene with limited initial state intervention.

Cons
Pervasive systemic corruption and burdensome red tape complicating basic property rights and contract enforcement.
Chronic energy shortages and aging physical infrastructure increasing operational costs for manufacturing.
High inflation rates and volatile currency values undermining capital preservation and long-term financial planning.

Personal income

0 → 35%

progressive

Corporate

0 → 10%

progressive

Capital gains

0 → 35%

progressive

VAT (standard)

18%

standard rate

i 5.1 PRIVACY GRADE

i 4.1 VERY LOW TAX

i 2 CRYPTO HAVEN

i 1.8 HOLDING

i 1.8 EASY CITIZENSHIP

i 1.7 DIVIDEND PIPELINE

─ On this page

01 Will Pakistan tax what you earn? 02 Will Pakistan tax what you own? 03 Is it easy to run a company in Pakistan? 04 Is Pakistan good for your holding company? 05 What does it cost to come and go from Pakistan? 06 Will Pakistan protect your privacy? 07 Is Pakistan itself a liability? 08 Will you feel free in Pakistan?

01/08

Will Pakistan tax what you earn?

●income tax ●tax residency ●territorial system

YES, A LOT. Pakistan taxes personal income heavily (top marginal rate 35%), and its definition of tax residence is wide: prolonged stay, economic centre of gravity, the net closes. The classic combo of high rate and broad catchment. Leaving is rarely as simple as buying a plane ticket.

Personal income taxi

0 → 35%

progressive · 6 brackets

Income simulatori

Income

Tax due

Effective rate

all-in

Marginal rate

+9%

salaried individuals with annual taxable salary exceeding PKR 10 million

+10%

non-salaried individuals and AOPs with taxable income exceeding PKR 10 million

Tax residence testi

183days

● 183-day rule

○ Economic interest

○ Family centre

○ Habitual abode

○ Extended-stay test

● Just one rule above is enough to make you tax-resident here.

02/08

Will Pakistan tax what you own?

●capital gains ●wealth tax ●inheritance ●dividends ●interest

YES, A LOT. Pakistan runs the full kit on owned wealth: capital gains at 35%, and an annual wealth tax above a threshold (top rate 1%). Holding here is expensive in every direction: flow, stock, and transfer.

Capital gainsi

35%

progressive · +9% salaried individuals with taxable income exceeding PKR 10 million · +10% non-salaried individuals and AOPs with taxable income exceeding PKR 10 million

Dividend taxi

15%

flat · +100% recipient of dividend is a resident but inactive taxpayer

Interest incomei

15%

progressive

Wealth taxi

progressive

Crypto · tax regimei

Regime

PROGRESSIVE

Rate

35%

As of March 2026, Pakistan has legalized and regulated crypto-assets under the Virtual Assets Act 2026, which established the Pakistan Virtual Assets Regulatory Authority (PVARA). While the Act introduced a specific 5% capital gains tax on crypto-to-fiat conversions, gains are generally treated as 'Income from Other Sources' or 'Capital Gains' under the Income Tax Ordinance 2001, subject to progressive individual tax rates reaching up to 35%. Crypto-to-crypto swaps are considered taxable disposals. Professional trading is taxed as business income at the same progressive rates.

Crypto-to-cryptoi

TAXABLE

each swap counts as a disposal — gains realised at every trade

FATF travel rulei

NOT SIGNED

no information-sharing obligation on VASP transfers

Inheritance systemi

NONE

no estate tax · no heir-based duties · no succession tax framework. Wealth transfers across heir-classes are not taxed in this jurisdiction. Only standard probate / registration fees may apply.

03/08

Is it easy to run a company in Pakistan?

●corporate tax ●criminal liability ●public registry ●VAT ●IP box

YES. Corporate tax in Pakistan sits at a low 10%, with VAT around it. Setting up and running a company is cheap; the rate won't be what kills a venture here.

Corporate taxi

0 → 10%

progressive · +1% Super tax imposed on income slabs

IP Box · Patent Boxi

NONE

no IP regime · IP income taxed under standard corporate rules

Misuse of corporate assetsi

NO CRIMINAL LIABILITY

Civil Matter / Companies Act 2017, Sections 204 and 216

In Pakistan, which follows a common law tradition, the misuse of assets by a sole shareholder-director of a solvent company is primarily a civil or regulatory matter. While the company is a separate legal entity, criminal charges like 'Criminal Breach of Trust' (Section 405/409 of the Pakistan Penal Code) require 'dishonest' intent to cause wrongful loss. Since the sole owner consents to the use of funds and the company remains solvent (no loss to creditors), the criminal threshold is not met. Such acts are instead treated as breaches of fiduciary duty or violations of the Companies Act 2017, punishable by administrative fines or tax penalties.

Shareholders privacyi

PUBLIC PAYWALL

Securities and Exchange Commission of Pakistan (SECP)

Directors privacyi

PUBLIC PAYWALL

Securities and Exchange Commission of Pakistan (SECP)

Incorporation costi

Private Limited Company (Pvt. Ltd.)

Private Limited Company

SECP Official Registration & Name Reservation Fees USD 18

Professional Legal & Incorporation Services (Foreigner Package) USD 1,482

Total USD 1,500

VAT standard ratei

18%

single rate · no reduced tiers

18%

04/08

Is Pakistan good for your holding company?

●treaty network ●participation exemption ●withholding

NO. Pakistan doesn't carry a treaty network, which makes it unsuitable as a holding jurisdiction. Any dividend flowing in or out faces full statutory withholding, and no domestic participation exemption can compensate for missing relief on the source side.

Territorial systemi

Individuals

WORLDWIDE

Corporates

WORLDWIDE

Individuals: worldwide income taxation regardless of source. Corporates: worldwide.

Participation exemptioni

NONE

no dividend participation exemption regime

CFC rulesi

APPLY

Retained income of a foreign entity is taxed at the dividend tax rate (15%) if it is controlled by Pakistani residents (over 50% ownership or over 40% by a single resident), lacks active business income, is not listed on a recognized exchange, and pays low foreign tax.

WHT · dividendsi

15%

non-resident outbound

WHT · interest

10%

non-resident outbound

WHT · royalties

15%

non-resident outbound

Tax-haven WHT

—

no punitive rate on record

Treaties signedi

active

Treaties pending

—

in negotiation

Tax treaty networki

origin · PK 0% > 0% no treaty

⌖

Inspect a country

Hover any country on the map to read its withholding-tax treaty with PK.

Country	Status	Dividends	Interest	Royalties

∅ // no treaties match

05/08

What does it cost to come and go from Pakistan?

●exit tax ●territorial system ●dual citizenship

SOME. Pakistan taxes worldwide income while you're resident, but there's no exit tax on the way out. The cost of leaving is mostly paperwork: unrealised gains follow you to the next jurisdiction untouched.

Exit taxi

NONE

no triggers active · residence change tax-free · no deemed-disposal mechanism

Dual citizenship

FORBIDDEN

naturalisation requires renouncing existing citizenship

Citizenship paths

● Residence

○ Marriage

● Birth

○ Descent

○ Investment

06/08

Will Pakistan protect your privacy?

●info exchange ●corporate registries

PARTLY. Pakistan has signed most of the standard exchange frameworks and operates a public corporate registry. Financial accounts are reported to your home tax authority, and your shareholdings are visible to anyone. Privacy is shallow on both axes.

Multilateral reporting frameworks 3/10 active · 3 pending

CRS

2018

CARF

—

FATCA

—

MLI

2020

BEPS

—

MAAC

2016

GLOBAL FORUM

—

EOIR

—

CRYPTO-CARF

—

CRYPTO TRAVEL RULE

—

07/08

Is Pakistan itself a liability?

●blacklists ●FATF standing

NO. Pakistan carries no entries on any major blacklist, though it sits outside FATF membership. Counterparties may apply light extra due diligence, but no formal stigma attaches to dealing with it.

Blacklist exposure Clear everywhere

FATF

grey / black list

non-cooperative list

FRANCE

ETNC list

SPAIN

tax-haven list

PORTUGAL

favourable regimes

BRAZIL

low-tax list

08/08

Will you feel free in Pakistan?

●press freedom ●crypto ●CBDC ●EU

NO. Press freedom in Pakistan is restricted (RSF rank #158). Civic space and independent media operate under pressure or not at all, a constraint that typically extends to financial expression as well, even where crypto isn't formally banned.

Press freedom · RSF indexi

158/180

score 29 · ↓ 6 ranks year-on-year

Central bank digital currencyi

Program	Status	Cross-border	Sources
Pakistan CBDC Goal of issuing a CBDC would be to promote financial inclusion and reduce corruption, and inefficiency. State Bank of Pakistan	RESEARCH	—	announce →

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PROFILE-ADJACENT Same shape, comparable overall friction.

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NOTABLY MORE FAVORABLE Same family of strategies, higher total score.

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NOTABLY LESS FAVORABLE Same family of strategies, lower total score.

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