The overseas Pakistanis who are willing to become taxpayers in Pakistan should do so by filing their income tax return. A non-resident person is someone who is generally a citizen of Pakistan but does not have to pay any income tax to the Pakistani government. However, he is allowed to file an income tax return in order to get tax filer status in Pakistan. Some expatriates must become overseas Pakistanis filer to carry out their financial transactions smoothly in their homeland. In Pakistan, an income tax filer is a person whose name appears on the active taxpayers list (ATL) of the Federal Board of Revenue (FBR). Being an overseas Pakistanis filer, one can enjoy a lower rate of withholding taxes, and it is easier to access various financial and administrative services. This blog discusses how overseas Pakistanis can acquire the status of filer, what rules apply, and why that is important.

Essential Documents to become a Filer in Pakistan

The following documents are required to file a return:

• CNIC/NICOP or a copy of a passport
• Active email address and a contact number (Pakistani) for IRIS verification
• Rent agreements, property records, or the calculation of capital gain (if applicable)
• Bank certificates of profit on debt
• Evidence on remittances, to avail section 111(4)

Step-by-Step Guide to Becoming a Filer Using the Online Portal

It is now easy to become an overseas Pakistanis filer online with the FBR and IRIS portal, regardless of whether you are in Pakistan or not.

Create an account on IRIS and obtain an NTN

Go to the FBR IRIS portal and e-enroll. For that, you will require a passport or NIC or NICOP (in the case of Pakistan citizens abroad), a working email address and a phone number to receive a verification code. Once you finish registration, you will be issued with national ta number (NTN), which will be your identification number when it comes to filing the return.

Find out your residency status

In completing the return, it is important to state correctly whether you are a resident or a non-resident. Only non-residents can declare Pakistan-source income. A wealth statement needs to be attached to the residents’ declared global income.

File the applicable return

In the case of income generated in Pakistan, fill the taxable return on income, where you are supposed to declare rental earnings, business earnings, capital gains, or profit on debt as applicable. You are still entitled to make a nil declaration or statement to be included in the active taxpayer list (ATL) if you don’t have Pakistan-source income. Overseas Pakistanis often practice this to receive tax benefits.

Check ATL status

After submitting the return, log in to see your inclusion in the ATL on the FBR webpage. Always bear in mind that the ATL of a given year is related to the previous tax year returns.

Taxation of Remittances

One frequent question that has been asked is whether the transfer of money into Pakistan will attract tax. The law is straightforward for this; the provisions of the Income Tax Ordinance section 111 (4) cannot be applied to foreign remittance received by official banking channels, as it is tax-exempt. This FBR tax exemption for overseas Pakistani safeguards them from further investigation, provided they maintain banking evidence of transfers. This is one of the significant tax exemptions provided by FBR to overseas Pakistanis as incentives.

Benefits for Overseas Pakistanis Filer

Any non-resident Pakistani who earns a taxable income in Pakistan is obliged to pay income tax on their income earned in Pakistan. It should be noted that the method of individual taxation in Pakistan is according to resident status, not according to the country of residence. This signifies that there are several benefits of being a tax filer in Pakistan. For instance, overseas Pakistanis tax gets reduced in more than 100 cases when an overseas Pakistani becomes a tax filer, such as banking, vehicle registration, and transfer of the immovable property. In this way, advantages are numerous for those who file taxes, particularly when they are willing to invest in the real estate sector, stock exchange, mutual funds, saving schemes or prize bonds. This is one of the most significant factors overseas Pakistanis need to know because, in case they wish to purchase any movable or immovable asset in Pakistan (such as a vehicle or a house) with only foreign income, they could save a lot of money, in the form of withholding tax, by merely becoming a filer. This can also assist in declaring the total assets acquired as a foreign source and not liable to be taxed in Pakistan. In this regard, overseas Pakistanis will also be exempted from the audit ordeal by the tax authorities of Pakistan, thereby being completely secured according to the laws of Pakistan.

General FBR Rules for Overseas Pakistanis

The FBR laws concerning overseas Pakistani taxpayers include proper assessment of residency, regular filing of returns and reporting of Pakistan-source revenues. The non-residents are not subjected to wealth statements and foreign incomes, but they are obliged to file when they have local income.

Avail Sidekick’s Services to Ensure Smooth Compliance

As a tax expert, Sidekick offers assistance to overseas Pakistanis willing to become filers in Pakistan. Their team would take clients through the whole process, including documentation and the registration process on FBR IRIS. Owing to residency status issues or the need to file income earned in Pakistan, Sidekick provides a seamless solution to all filing needs. Sidekick helps clients to maximize their benefits by making sure that they take all the advantages of the lower overseas Pakistanis tax rates available for the filers. Overseas Pakistanis can trust Sidekick to meet all the tax obligations and harness the benefits that accrue with being a filer in Pakistan.

Conclusion

In short, the act of becoming an overseas Pakistanis filer is both a financial benefit and a lawful requirement. Whereas, tax on overseas Pakistanis is applicable only on Pakistani-source income, but a taxpayer who provides an income tax return or statement can enjoy a lower withholding rate and inclusion in the ATL.