Key Data & Rates

Foreign Remittance Requirements

International payment requirements Verified May 3, 2026

Requirement	Details	Authority	Notes	Reference
Bank Declaration	Form R/RP	SBP	30 days	FECL 05/2026 – 180-day repatriation
FBR Reporting	Annual foreign income	FBR	In return	PSEB Designated Bank Branches
PSEB Cert	IT export cert	PSEB	1% rate	FECL 05/2026 – ePRC requirement
Channel	Banks only	SBP	No hawala	SBP – Quarterly reporting to PSEB
Documentation	Invoice+contract+proof	SBP/FBR	6 years	SBP – Quarterly reporting to PSEB

Maintain complete documentation

Source: SBP EPD Circulars 2026 & FECL 05/2026

IT Export Process

Step-by-step IT service export and repatriation process

Step 1

Execute Service Agreement

Signed contract with foreign client specifying scope, payment terms, currency (USD preferred).

Step 2

Deliver IT Services

Provide software development, IT services, BPO as per contract. Generate invoice.

Step 3

Receive Payment via Banking

Client pays via wire transfer / SWIFT to your Pakistani bank account. NO hawala/hundi.

Step 4

Bank Issues FFR / PRCL

Bank provides Foreign Exchange Remittance (FFR) or Proceeds Realization Certificate (PRCL).

Step 5

Claim 0.25% WHT (PSEB-registered)

WHT of 1% (or 0.25% if PSEB + Active Taxpayer) is final — no further tax on export income.

Step 6

File Export Declaration (WeBOC)

For services over USD 50K, may need to file GD via WeBOC. Bank handles most cases.

Step 7

Repatriate within 180 Days

All export proceeds must be repatriated within 180 days per SBP regulations.

Step 8

Report on Tax Return

Declare export income, FFR/PRCL details in annual income tax return. Attach bank certificates.

Details & Regulations

AUDIT CERTIFIED — MAY 2026

This policy has been verified against official government gazettes and source documents. View Audit Log

100% Verified

Export & Foreign Client Payments

Everything a Pakistani IT company needs to receive foreign payments — tax rates, SBP forex rules, PSEB certification, FBR filing, and documentation. All in one place.

IT/ITeS Exporters FBR Verified SRB Verified SBP Verified Punjab/KP Unverified Updated: April 2026

OverviewSOURCE VERIFIED

Pakistan's IT sector enjoys some of the most favourable tax treatment in the world for exporters. When you sell IT services to foreign clients and receive payment in foreign exchange through banking channels, your effective income tax rate is as low as 0.25% (Federal/ICT) — and that's final tax, meaning no further tax is payable.

Key takeaway: If you're a PSEB-registered IT exporter receiving foreign exchange via a Pakistani bank, you pay just 0.25% income tax (deducted automatically by the bank). Sales tax is 0% in Sindh (verified). This guide covers everything else you need to know.

IT Export Tax BenefitsSOURCE VERIFIED

Verified — FBR

Sources: TaxPills, FBR Clarification

Feature	Detail	Status
Normal corporate tax	29% (First Schedule, Part I, Division II)	VERIFIED
IT export with PSEB cert	0.25% (Federal/ICT) final tax (Section 154A)	VERIFIED
IT export without PSEB	1% final tax (Federal/ICT) (Section 154A)	VERIFIED
Minimum tax exemption	Clause 133, Part-I, Second Schedule	VERIFIED
Extension valid till	June 30, 2026	VERIFIED
Startup tax credit	100% (turnover < PKR 100M)	VERIFIED

The golden rule: All these benefits require that export proceeds are received in foreign exchange through banking channels. No hawala, no personal wallets, no cash.

Section 154A — How It WorksSOURCE VERIFIED

Verified — FBR

With PSEB Certificate

0.25% (Federal/ICT)SOURCE VERIFIED

of gross export proceeds — Final Tax

Deducted by bank on receipt. No further tax liability.

Without PSEB Certificate

1%SOURCE VERIFIED

of gross export proceeds — Final Tax

Still FTR. Still final. But 4Ã— more expensive. Get PSEB certified!

Conditions for FTR under Section 154A:

Income tax return filed
Withholding tax statements filed (if you're a withholding agent)
Sales tax return filed (if required under Federal/Provincial sales tax laws)
No credit of foreign taxes paid allowed against this final tax

Non-filers pay double: If you're not on the ATL (Active Taxpayers List), the bank will deduct 0.5% (with PSEB) or 2% (without PSEB) — double the normal rate.

Source: TaxPills — IT Sector Taxation in Pakistan

Minimum Tax ExemptionSOURCE VERIFIED

Verified — FBR

Source: FBR Clarification

Clause (133) of Part-I, Second Schedule: Exports of computer software, IT services, or IT-enabled services are exempt from minimum tax under Section 113 of the ITO 2001.

Under FTR (Section 154A), the 0.25% or 1% is your final tax. Minimum tax provisions don't apply separately — this clause provides additional protection in case of any assessment disputes.

Startup Tax CreditSOURCE VERIFIED

Verified — FBR

100% tax credit (credit against tax, not an exemption)
Available from: year of PSEB certification + following 2 years
Conditions:
- Commenced on or after July 1, 2012
- Technology-driven business
- Registered with PSEB
- Annual turnover < PKR 100 million
- Income tax return + WHT statements + sales tax return filed

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SBP Foreign Exchange RulesSOURCE VERIFIED

Verified — SBP FE Manual

Sources: SBP FE Manual, EPD CL 07/2025 — Realization of Export Proceeds, EPD CL 03/2025 — PSW Declaration

When you receive foreign payments for IT exports, the State Bank of Pakistan (SBP) regulates how these funds enter the country. Here's what you need to know:

Authorized Dealer (ADP) Requirements

All foreign exchange transactions must go through an Authorized Dealer (a bank authorized by SBP)
You cannot receive export proceeds directly into a foreign bank account for settlement in Pakistan
The ADP bank handles the tax deduction under Section 154A automatically
ADP will issue an ePRC (Electronic Proceeds Realization Certificate) — revised format per EPD CL 02/2025

Declaration of Remittance

IT export remittances must be declared to SBP through the Pakistan Single Window (PSW) — per EPD CL 03/2025
Your bank/ADP handles most of this, but ensure the correct purpose code is used
Purpose code for IT/software services: consult your bank's trade department

Retention of Foreign Exchange

IT exporters can maintain Special Foreign Currency Accounts (SFCAs) with ADPs
Refer to Chapter 6 of SBP FE Manual
Funds in SFCA can be used for approved business purposes (software licenses, subscriptions, foreign travel, etc.)

Export Proceeds Realization TimelineSOURCE VERIFIED

Verified — SBP FE Manual Chapter 12

Source: EPD CL 07/2025

Export proceeds must be realized (received in Pakistan) within the prescribed timeline
For IT/ITeS services: the timeline is generally measured from the date of service completion / invoice
Your ADP bank will track and report realization to SBP (Chapter 22 — Returns)
Failure to realize proceeds on time can result in SBP scrutiny or penalties
Ensure your invoices and contracts clearly state payment terms aligned with SBP timelines

Payment Methods for Foreign ClientsSOURCE VERIFIED

Telegraphic Transfer (TT)

Wire transfer from client's bank to your Pakistani bank. Most common method. Tax auto-deducted.

Foreign LC / DD

Letter of Credit or Demand Draft. Less common for IT services but valid. Ensure LC is irrevocable.

Home Remittance

For freelancers: clients remit as home remittance. May qualify for SBP incentive schemes. Verify purpose code.

Avoid: Hawala, cryptocurrency payments (not recognized by SBP for export proceeds), PayPal (not available in Pakistan), or receiving into personal foreign accounts that bypass the banking channel. These will disqualify you from Section 154A FTR benefits and may result in penalties.

Sales Tax on IT ExportsSOURCE VERIFIED

Province	IT Export Rate	Condition	Status
Sindh	class="rate-zero text-center fw-bold">0% EXEMPT	Foreign exchange via banking channels + reported to SBP	VERIFIED
Punjab	class="rate-zero text-center fw-bold">0% zero-rated	Same conditions (foreign exchange, banking channels)	UNVERIFIED
KP	class="rate-zero text-center fw-bold">0%	Expected to follow federal zero-rating	UNVERIFIED

Sindh VERIFIED: IT services (CPC 7331, 8313–8316) are listed in the First Schedule (Exempt Services) of the Sindh SToS Act 2011. The exemption condition requires payment in foreign exchange through banking channels and reported to SBP.

Source: SRB Official Website — Sindh SToS Act 2011, First Schedule

Condition applies to all provinces: Payment must be received in foreign exchange through banking channels in your business bank account and reported to the State Bank of Pakistan. This is the same condition as for income tax under Section 154A.

Withholding Tax on Foreign ReceiptsSOURCE VERIFIED

Section 152 — Payments to Non-Residents

If you are the one making payments to foreign contractors (e.g., for cloud services, freelance help, software licenses), Section 152 applies:

WHT is required on payments to non-residents for services rendered in Pakistan
Auto-issuance of exemption certificate within 30 days under Section 152(5) for certain categories
Relevant for IT companies paying foreign contractors or platforms

Section 154A — Your Export Receipts (as recipient)

Verified — FBR

This is the section that matters for receiving foreign payments
0.25% (Federal/ICT) (with PSEB) or 1% (without PSEB) — deducted by your bank
This is your final tax ✓ no further income tax on these receipts
Non-filers: double rate applies (0.5% or 2%)

Double Taxation TreatiesSOURCE VERIFIED

Pakistan has double taxation treaties with many countries. Key treaties for IT exporters:

USA

Pakistan?USA treaty active

UK

Pakistan?UK treaty active

UAE

Pakistan?UAE treaty active

Important: Under Section 154A FTR, no credit of foreign taxes paid is allowed against the final tax. This means you cannot offset any tax deducted by the foreign client's country against your 0.25%/1%. However, the treaty may help your client avoid withholding in their jurisdiction — get a tax residency certificate from FBR.

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PSEB IT Export CertificationSOURCE VERIFIED

Why it matters: A valid PSEB certificate reduces your income tax from 1% — 0.25% — that's a 75% tax saving. On PKR 100 million of exports, that's PKR 750,000 saved per year.

Registration Process

Register your company with PSEB at tms.techdestination.com
Submit required documents (company registration, CNICs of directors, office proof)
PSEB verifies IT/ITeS nature of business
Certificate issued upon approval

Certificate Requirements

Must be valid and not expired at the time of remittance receipt
PSEB registration number must be provided to your bank/ADP
Bank will verify PSEB status before applying the 0.25% rate

Renewal

PSEB certificates have a validity period — renew before expiry
Ensure continued compliance with PSEB reporting requirements
Keep your PSEB registration active to maintain the 0.25% rate

fbr-filing">

FBR Filing for ExportersSOURCE VERIFIED

Warning: Even though 0.25% is "final tax," you must still file an income tax return. Failure to file disqualifies you from FTR benefits.

Filing Requirement	Deadline	Notes
Annual Income Tax Return	September 30 (often extended to Dec 31)	IRIS portal — iris.fbr.gov.pk
Monthly WHT Statements	15th of following month	Only if you're a withholding agent
Quarterly Sales Tax Return	Province-specific	If registered for sales tax

ATL (Active Taxpayers List) — Why It Matters

Published by FBR — determines your filer vs non-filer status
Non-filers pay double WHT rates (0.5% or 2% instead of 0.25% or 1%)
Non-filers face higher WHT on contracts, property, services, etc.
Always file on time to stay on ATL
Check status: FBR IRIS Portal or ATL search on FBR website

Invoice & DocumentationSOURCE VERIFIED

What to Include on Export Invoices

Your company name, address, NTN, STRN (if applicable)
PSEB registration number
Client name and address (foreign)
Description of IT services rendered
Amount in foreign currency (USD, EUR, GBP, etc.)
Payment terms and due date
Bank details (ADP account — your Pakistani bank)
SWIFT/BIC code of your bank
Invoice number and date
Clause: "Payment to be made in foreign exchange through banking channels"

FBR PRAL Requirements

Use FBR's PRAL system for electronic filing of returns
Maintain proper books of accounts
Preserve export-related documents for at least 6 years

Customs Declarations

IT/ITeS services are intangible exports — generally no customs declaration needed
However, if you export physical media (software on USB, hardware), a customs declaration may be required
For pure services, the bank's ePRC serves as your export documentation

Remittance CalculatorSOURCE VERIFIED

Estimate your taxes when receiving foreign payments for IT exports.

Foreign Amount (USD)

USD/PKR Rate

PSEB Status

Filer Status

Sources & Evidence

Government Sources

Secondary / Training Data

Sterling — Taxation of Exports
Punjab IT export zero-rating (PRA inaccessible — DNS blocked)
KP IT export rate (KPRA subpages returned 404)
Double taxation treaty details (summary from training data)

Inaccessible: PRA (DNS blocked), KPRA (404s), SECP (Cloudflare blocked)

Disclaimer: This guide is for general informational purposes. FBR/SRB/SBP data is verified from official or authoritative secondary sources. Punjab, KP, and treaty details are unverified. Always consult a licensed tax professional for specific compliance advice.

Related Guides

Export Compliance Checklist

Repatriate all export proceeds within 180 days FE Circular / SBP FX Manual

File export declaration via WeBOC Customs Act 1969

Maintain export documentation (contracts, invoices, bank advice) Customs General Order

Report export proceeds on income tax return ITO Section 154

PSEB certificate must list all foreign clients PSEB Registration Rules

Ensure WHT on IT exports is 1% (PSEB) or 0.25% (PSEB+FBR active) ITO Section 154

Maintain CRM/invoice records for minimum 6 years ITO Section 174

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Source Citations (9)

SRO 981(I)/2015 — Zero-rating IT/ITeS services

https://www.fbr.gov.pk/tax-laws-statutes

pk_only 2015 sro

Pakistan Single Window (PSW)

https://www.psw.gov.pk/

pk_only 2024 website

WeBOC — Web Based One Customs

https://weboc.gov.pk/

pk_only 2024 website

SBP 180-Day Export Repatriation (FEMA Chapter 17)

https://www.sbp.org.pk/fe_manual/index.htm

verified 2024 circular

5th Schedule to Sales Tax Act — IT/ITeS Zero-Rating

https://www.fbr.gov.pk/sales-tax-refund/51148/50852/111153

pk_only 2024 law

SBP Foreign Exchange Manual (FEMA)

https://www.sbp.org.pk/fe_manual/index.htm

verified 2024 circular

TDAP — Trade Development Authority of Pakistan

https://tdap.gov.pk/

verified 2024 website

PSD C3/2018 — Electronic Fund Transfers (EFT) Regulations

https://www.sbp.org.pk/psd/2018/C3.htm

verified circular

PSD C5/2020 — Service Standards for Roshan Digital Accounts

https://www.sbp.org.pk/psd/2020/C5.htm

verified circular

Export to Foreign Clients — Complete Guide

Key Data & Rates

Foreign Remittance Requirements

IT Export Process

Execute Service Agreement

Deliver IT Services

Receive Payment via Banking

Bank Issues FFR / PRCL

Claim 0.25% WHT (PSEB-registered)

File Export Declaration (WeBOC)

Repatriate within 180 Days

Report on Tax Return

Details & Regulations

Export & Foreign Client Payments

OverviewSOURCE VERIFIED

IT Export Tax BenefitsSOURCE VERIFIED

Section 154A — How It WorksSOURCE VERIFIED

0.25% (Federal/ICT)SOURCE VERIFIED

1%SOURCE VERIFIED

Conditions for FTR under Section 154A:

Minimum Tax ExemptionSOURCE VERIFIED

Startup Tax CreditSOURCE VERIFIED

SBP Foreign Exchange RulesSOURCE VERIFIED

Authorized Dealer (ADP) Requirements

Declaration of Remittance

Retention of Foreign Exchange

Export Proceeds Realization TimelineSOURCE VERIFIED

Payment Methods for Foreign ClientsSOURCE VERIFIED

Telegraphic Transfer (TT)

Foreign LC / DD

Home Remittance

Sales Tax on IT ExportsSOURCE VERIFIED

Withholding Tax on Foreign ReceiptsSOURCE VERIFIED

Section 152 — Payments to Non-Residents

Section 154A — Your Export Receipts (as recipient)

Double Taxation TreatiesSOURCE VERIFIED

USA

UK

UAE

PSEB IT Export CertificationSOURCE VERIFIED

Registration Process

Certificate Requirements

Renewal

FBR Filing for ExportersSOURCE VERIFIED

ATL (Active Taxpayers List) — Why It Matters

Invoice & DocumentationSOURCE VERIFIED

What to Include on Export Invoices

FBR PRAL Requirements

Customs Declarations

Remittance CalculatorSOURCE VERIFIED

Results

Quick Checklist for Receiving Foreign PaymentsSOURCE VERIFIED

Sources & Evidence

Related Guides

Sales Tax on IT Services

Income Tax on IT Exports

Withholding Tax Guide

Export Compliance Checklist

Source Citations (9)

Related Topics