Freelancing & Tax FAQs: Pakistan
Do I need to pay tax on freelancing income?
Yes. All income earned in Pakistan, including freelancing income from foreign clients, is taxable. However, IT/ITeS exports enjoy reduced withholding tax rates (0.25% for PSEB-registered, active filers). You must register with FBR and file annual returns.
What is PSEB registration and do I need it?
PSEB (Pakistan Software Export Board) registration is available to IT companies and freelancers. It provides tax benefits, access to government incentive programmes, and credibility with foreign clients. Registration is free and done online at pseb.org.pk.
How do I receive foreign freelancing payments in Pakistan?
Through banking channels: direct wire transfer, Payoneer, or Wise. SBP requires all foreign exchange to come through authorised dealers (banks). Using informal channels (hawala/hundi) is illegal. Maintain proper documentation for all receipts.
What records do I need to keep?
Bank statements showing all receipts, client contracts or invoices, proof of expenses (internet, equipment, software), withholding tax certificates, and PSEB certificate if registered. Keep records for at least 6 years.
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