🇵🇰How to Receive International Payments in Pakistan

Pakistan's foreign exchange system is regulated by the State Bank of Pakistan (SBP) under the Foreign Exchange Regulation Act 1947 (FERA) and the SBP Act 1956. For freelancers, the operative framework is set out in the SBP's Foreign Exchange Manual and the various circulars issued under Chapter 19 (Export of Services). Pakistan has historically maintained a managed float regime for the Pakistani rupee (PKR), and the SBP sets the regulatory framework within which authorised dealers (commercial banks) process international transfers.

Inward remittances for export of IT and IT-enabled services (ITeS) are among the most actively promoted foreign exchange flows by the government. The Pakistan Software Export Board (PSEB), operating under the Ministry of Information Technology and Telecommunication, has been instrumental in lobbying for and implementing regulatory accommodations for freelancers and IT exporters. The SBP's facilitation of freelance remittances is explicitly linked to Pakistan's priority of increasing foreign exchange earnings from the digital sector.

Foreign currency received by a Pakistani freelancer can be credited in two forms: converted to PKR at the bank's selling rate at the time of receipt, or retained in a Foreign Currency Account (FCA). The SBP permits resident Pakistani nationals to open and maintain Foreign Currency Accounts under the Foreign Currency Accounts Scheme. An FCA allows you to hold USD, GBP, or EUR domestically without immediate conversion to PKR, which can be useful for pricing stability when invoicing in foreign currency or when managing timing of conversion.

The distinction between banking channel remittances and informal value transfer (hundi/hawala) is significant. The SBP requires that freelance income be received through the formal banking system — an authorised dealer bank, Payoneer (which operates under the SBP's Electronic Money Institution framework), or another licensed payment service provider. Informal channels are illegal for business income and will prevent you from claiming the IT export tax exemption or PSEB registration benefits.

SRO 1239(I)/2022 is the most important regulatory instrument for Pakistani IT freelancers. Issued by the Federal Board of Revenue (FBR) under the Income Tax Ordinance 2001, it provides a 100% income tax exemption on export proceeds of computer software, IT services, and ITeS received through the banking channel up to 30 June 2025. The exemption applies to income that is declared in the annual income tax return and substantiated by bank encashment certificates or remittance evidence showing the foreign currency was converted through an authorised dealer.

The IT and ITeS exemption under SRO 1239(I)/2022 covers freelancers who provide software development, IT consulting, digital marketing, data processing, business process outsourcing, and a range of other technology-mediated services. The key eligibility criteria are: (1) the services must be provided from Pakistan, (2) the client must be a foreign person or entity, and (3) payment must be received through the formal banking system in foreign exchange. Services provided to Pakistani clients, even in foreign currency, do not qualify.

PSEB registration is not legally mandatory to claim the SRO 1239(I)/2022 exemption, but it provides several practical benefits. The PSEB maintains a register of Pakistani IT exporters and issues IT Export Certificates that some banks require as supporting documentation when processing large remittances. PSEB registration also gives access to government facilitation services, official participation in international technology exhibitions, and priority processing at certain embassies for business visa applications. Registration is free and done online at pseb.org.pk.

Under the SBP's Circular No. 17 of 2022, freelancers and IT companies can retain up to 35% of their foreign exchange earnings in a Foreign Currency Account without mandatory conversion to PKR. The remaining 65% must be surrendered to the bank within 60 days of receipt (for individuals) or 30 days (for companies). The SBP has periodically revised the retention limit — check the current applicable circular on sbp.org.pk before planning your cash flow.

Payoneer dominates the Pakistani freelance payment landscape by a wide margin. It has had an operational presence in Pakistan for over a decade, is explicitly named in SBP guidance on acceptable payment channels for IT export proceeds, and its withdrawals to Pakistani bank accounts are treated as formal banking channel remittances eligible for the IT export tax exemption. Payoneer provides a US virtual bank account, EUR IBAN, and UK sort code that clients can pay to directly. Withdrawal to a Pakistani bank account arrives in PKR after conversion at Payoneer's rate, or can sometimes be directed to an FCA in USD at partner banks. Payoneer also issues account statements and transaction histories that are accepted as remittance evidence by the FBR.

Direct SWIFT wire transfers are preferred by freelancers working with enterprise clients who pay from corporate banking systems. Share your IBAN (Pakistani IBAN is 24 characters, starting with PK), bank name, SWIFT/BIC, and account number. HBL's SWIFT code is HABBPKKA; UBL's is UNILPKKA; MCB's is MUCBPKKA; Meezan Bank's is MEZNPKKA. Most major Pakistani banks maintain correspondent banking relationships with US, UK, and UAE banks, enabling straightforward USD and EUR wire receipt.

Wise has limited availability in Pakistan as of 2025. Wise does not support incoming transfers to Pakistani bank accounts through its standard platform. Some Pakistani freelancers maintain a Wise account linked to a foreign address or use Wise via a third-country account, but this creates documentation complications for SBP compliance and FBR exemption claims. Until Wise officially launches Pakistan-inbound services, it is not a primary channel.

JazzCash has partnerships with international remittance services for personal remittances. However, JazzCash is primarily a consumer wallet and does not generate the formal bank-level documentation (encashment certificates, SWIFT confirmations) required to substantiate IT export income for FBR purposes. Use JazzCash only for small personal transfers, not as your primary freelance income channel.

File your National Tax Number (NTN) and complete Active Taxpayer List (ATL) registration with the FBR before claiming the IT export exemption. The FBR's exemption under SRO 1239(I)/2022 requires the taxpayer to be registered and to file an annual income tax return, even if the net tax due is zero due to the exemption. Unregistered individuals cannot claim the exemption retroactively without penalty. NTN registration is free and done online at iris.fbr.gov.pk.

Request an Encashment Certificate (also called a Foreign Exchange Encashment Certificate or Bank Encashment Certificate) from your bank for every significant foreign payment. This document — typically issued on bank letterhead — confirms that the specified amount of foreign currency was received and converted through the authorised dealer, the date of conversion, the PKR amount, and the exchange rate. It is the primary evidentiary document for the FBR IT export exemption claim and for the SBP's foreign exchange documentation requirements.

If you work with a US-based company that treats you as a contractor subject to 1099 reporting, submit IRS Form W-8BEN to that client. Pakistan and the United States do not have a bilateral income tax treaty, but Form W-8BEN establishes your foreign status and prevents the client from applying US backup withholding (24%) to your payments. Keep a copy of the completed W-8BEN as part of your client documentation.

Track the currency retention rules carefully. If 35% FCY retention is permitted, you can hold that portion in your FCA and convert at a more favourable rate later. However, the 65% conversion must occur within 60 days (for individuals) — missing this deadline can complicate the encashment certificate documentation and may trigger SBP compliance queries at your bank.

The income tax position for Pakistani IT freelancers is currently among the most favourable globally, primarily because of SRO 1239(I)/2022. This statutory regulatory order provides 100% income tax exemption on income from export of computer software, IT services, and IT-enabled services received in foreign exchange through the banking system. The exemption is available through 30 June 2025, and the IT sector has consistently advocated for its extension in the federal budget cycle. Monitor FBR notifications for any extension or modification.

Outside the IT export exemption, freelancers who provide services not covered by SRO 1239(I)/2022, or who receive income through non-banking channels, are subject to normal income tax under the Income Tax Ordinance 2001. The applicable rates for salaried and non-salaried individuals for the 2025 tax year are: 0% up to PKR 600,000 annually, 5% from PKR 600,001 to 1,200,000, 15% from PKR 1,200,001 to 2,400,000, 25% from PKR 2,400,001 to 3,600,000, 30% from PKR 3,600,001 to 6,000,000, and 35% above PKR 6,000,000.

Withholding tax under Section 153 of the Income Tax Ordinance applies to certain payments within Pakistan, but inward foreign remittances received from abroad are not subject to domestic withholding tax at source. The withholding tax regime primarily affects Pakistani-source payments between local parties.

The annual income tax return is due on 30 September for the tax year ending 30 June. For the IT export exemption, the return must include a statement of foreign exchange earnings supported by encashment certificates or bank statements. The Iris portal (iris.fbr.gov.pk) is used for filing. Failure to file, even with zero tax liability, results in removal from the Active Taxpayer List and loss of reduced withholding tax rates on future transactions.