In 2020, nearly 6.3 million Overseas Pakistani immigrants were residing abroad, making Pakistan one of the top ten immigrant populations globally.
For Overseas Pakistanis, the Pakistani government has introduced several measures in the fiscal year 2025-24 budget to bring non-filers/overseas into the tax net.
Given the majority of these measures, the question arises: will overseas Pakistanis also be affected by these measures?
FBR Spokesperson: No Measures to Bring Overseas Pakistanis into Tax Net in Current Budget
In this regard, FBR spokesperson Bakhtiar Muhammad said that no measures have been taken in the current budget to bring overseas Pakistanis into the tax net.
“Section 114 of the FBR’s Income Tax Ordinance talks about filing tax returns by such citizens or their exemption,” he explained.
He added that the Income Tax Act defines a ‘resident’ and ‘non-resident’ Pakistani citizen. This means that if an overseas Pakistani (regardless of their country of affiliation) resides in Pakistan for 183 days during a fiscal year, they are required to submit details of all their assets, both inside and outside the country.
“In case of staying in Pakistan for even one day less than this period, overseas Pakistanis are not required to file income tax returns,” he clarified.
Overseas Pakistanis Not Filing Tax Returns Despite Staying in Pakistan for the Required Period Are Tax Defaulters: FBR
Discussing the tax return filing law for overseas Pakistanis, the FBR spokesperson clarified the matter regarding the applicability and implementation of the department’s laws.
He said that if any overseas Pakistani violates the existing law in this regard, i.e., does not file a tax return despite staying in Pakistan for 183 days of the fiscal year, they will be considered a non-filer or tax defaulter and all FBR laws applicable to any other non-filer Pakistani citizen will be applied to them.
Non-Pakistani Citizen Required to Pay Income Tax on Working in Pakistan for at Least Two Months or More: FBR
Discussing the income tax laws for citizens who come to Pakistan from abroad and work, Bakhtiar Muhammad further explained that income tax has to be paid for working in every country in the world.
“Similarly, if a citizen from abroad comes to Pakistan and works, he will also have to pay income tax from the second month of his employment,” he said.
Tax expert and former Minister of State Ashfaq Tola said that except for the United States, all countries obtain tax returns from their citizens residing abroad.
READ MORE: Pakistan increases taxes on air travel to Saudi Arabia, UAE, and other countries
Emphasizing the importance of income tax laws, he said that overseas Pakistanis also have the facility that if they stay in Pakistan for even 182 days, they are not required to submit details of their assets, both inside and outside the country.
“However, governments can obtain details of assets or tax returns of any citizen residing abroad under international agreements between the two countries,” he said.
Commenting on the issue of overseas Pakistanis being filers or non-filers, he said that the FBIR has no other option besides this section of the Income Tax to obtain tax returns from overseas Pakistanis.
According to Ashfaq Tola, any overseas Pakistani who stays in Pakistan for 183 days during a fiscal year has to declare all sources of their income, both inside and outside the country.
“In case of violation, the FBIR is authorized to use the laws made for non-filers against overseas Pakistanis as well,” he said.
According to Shabaz Rana, a journalist who keeps an eye on economic affairs, the definition of a ‘resident’ and ‘non-resident’ Pakistani citizen in the income tax laws creates complexities for overseas Pakistanis as this law is not clear.
Talking to Urdu News, he said that the FBR has been making various changes to the tax laws, which are causing various complexities for taxpayers.
He believes that the FBR should eliminate the definition of resident and non-resident Pakistani citizen from this law and make all citizens liable to file tax returns and pay income tax in the new law.
Criticizing the FBR’s said law, he said that while non-resident Pakistanis are exempted from tax in the law, in reality, tax is also being taken on the property of such citizens in Pakistan.
Shabaz Rana believes that such laws of the FBR tell people how to avoid tax and instead of addressing the loopholes in these laws, another law is made to bring non-filers into the tax net.