Visa holders · From Pakistan
Pakistan takes 10% of Naya Pakistan Certificate profit as a final tax. For anyone moving to the US from Pakistan, taxes in the US start on the whole profit from the first day of US residency.
Naya Pakistan Certificates are sold only through a Roshan Digital Account (RDA), a bank account in Pakistan for Pakistanis abroad. Pakistan exempts a non-resident’s profit on a foreign-currency RDA, and on a rupee RDA funded only by money sent from abroad. The US taxes profit on the account and on conventional certificates as interest, generally in the year it is credited. No IRS guidance covers Islamic certificates.
Updated · Sources
Pakistan’s rules for tax year 2027
- 10%
- comes off conventional and Islamic certificate profit before it reaches your RDA, and can be credited against US tax, within limits.
- 2.75%
- of the price is collected as advance tax when a NICOP or POC holder sells property in Pakistan.
- Over 182 days
- in another country, as a resident taxpayer abroad, can end a citizen’s Pakistani residence for the tax year.
Tax year 2027 runs from July 1, 2026 to June 30, 2027. A seller with only a CNIC who is off the Active Taxpayers’ List may pay 11.5% instead of 2.75%.
Your travel dates and your passport decide how long Pakistan counts you as resident.
Pakistan settles residence for a whole tax year at once, so the month you leave can decide a full year.
You leave Pakistan in January or later
If you were in Pakistan from July 1, leaving on or after January 1 keeps you resident for that whole tax year. July 1 to December 31 is 184 days, past the 183 that make you resident.
You are a Pakistani citizen
Leaving Pakistan does not by itself end a citizen’s residence there. A full Pakistani tax year in the US as a resident alien ends it. On the law’s words, an F-1 student who is still a US nonresident alien may stay a Pakistani resident. A Pakistani government employee posted abroad stays resident regardless.
You earn US pay while still resident
Pakistan exempts your US salary in a year you are still resident there, if US tax was paid on it. Tax your employer withheld counts as paid. Other foreign income gets a Pakistani credit for the US tax on it, up to Pakistan’s own tax on that income. A resident with $10,000 or more of foreign income, or $100,000 or more of foreign assets, also files a statement listing them.
You leave with no plan to return
Pakistan’s Income Tax Ordinance requires anyone leaving for good to notify the tax Commissioner at least 15 days before departure. The notice comes with a return for the period since your last one, treated as a separate tax year.
You work during visits to Pakistan
Once only the US counts you as resident, Article XI(1) of the treaty spares pay for work on visits to Pakistan from Pakistani tax. Your visits must total 183 days or fewer in a tax year. The work must also be for a US resident, and the US must tax the pay.
As a non-resident, you owe Pakistani tax only on income from Pakistan. That includes rent, gains on property and shares there, and dividends from Pakistani companies. A green card or enough days in the US make you a US resident. From then on, the US taxes all your income from Pakistan, even what Pakistan exempts.
A Rs 30 million house sale in Pakistan starts with Rs 825,000 of advance tax, whatever the gain.
Pakistan taxes an overseas Pakistani’s property sale at two points: when the sale is registered, and on the gain itself. As a US resident, you also report the whole gain on your US return, worked out in dollars. The US home-sale exclusion may cover a main home you owned and lived in for 2 of the 5 years before the sale. It can shield $250,000 of gain ($500,000 married filing jointly).
Advance tax at registration
Rs 825,000
The registrar collects it at the 2.75% rate when the transfer is registered. It counts toward your final Pakistani tax on the sale.
Tax on the gain, house bought in 2025
Rs 1,500,000
Property bought from July 1, 2024 pays 15% on the gain, however long you held it. The US credits the full Rs 1.5 million, within the Form 1116 limit. You pay the Rs 675,000 balance with your Pakistani return in 2027. On the cash method, that part of the credit falls on your 2027 US return.
Tax on the gain, house bought in 2021
Rs 0
A house bought by June 30, 2024 and held over 4 years carries no Pakistani gains tax. The Rs 825,000 comes back only through a Pakistani return. As tax due back to you, none of it earns a US credit (Treas. Reg. 1.901-2(e)(2)(i)).
The figures use the rates for transfers from July 1, 2026. The advance tax rate is in Division X of Part IV of the First Schedule to the Ordinance. The gains rates are in Division VIII of Part I. The example assumes you hold a NICOP, are on the Active Taxpayers’ List when you sell, and did not buy through an RDA. If you did buy through an RDA, the 2.75% is your final Pakistani tax on the sale. Older property pays a rate that falls with the holding period: a flat reaches 0% after 2 years, and a plot after 6. A sale completed before your US residency starting date is outside US tax.
The US-Pakistan tax treaty can spare a private pension from Pakistani tax, and puts no cap on Pakistan’s tax on your interest or gains.
The 1957 treaty has no article on interest, capital gains or social security, so Pakistan’s own law sets those taxes. Each row is for a year in which only the US treats you as resident.
| Pakistan | US | |
|---|---|---|
| Profit on an ordinary rupee deposit or National Savings | 10% for a non-resident Check what National Savings withheld | Taxed |
| Rent from property in Pakistan | Taxed | Taxed A home first rented after 2017 is depreciated over 30 years |
| Dividends from a Pakistani company | Taxed Pakistan-source income | Taxed Article VII(1)’s exemption leaves out US residents |
| A private pension or annuity from Pakistan | Not taxed Article X(1), unless an approved or recognized superannuation fund pays it | Taxed |
Article XV(1) lets you credit Pakistan’s tax against the US tax on the same income, within the Form 1116 limit.
Which loose ends in Pakistan cost new US residents money?
Holding units in Pakistani mutual funds
Pakistani mutual funds are set up as trusts under SECP rules. US rules generally treat them as corporations, and so usually as PFICs. Each fund generally needs its own Form 8621 every year. The treaty adds no exception to that form, since it has no pension-fund article and no tie-breaker.
Listing only your bank accounts on the FBAR
Once your foreign accounts together pass $10,000, your FBAR must list more than your RDA. Pakistani fund accounts count, and so may certificates your bank holds for you and a National Savings account. Each owner of a joint account with a parent generally reports its full value.
Counting on EOBI to follow you
An EOBI old-age pension needs 15 years of contributions. It is suspended while you live outside Pakistan, unless EOBI’s regulations allow payment abroad. If it is paid, the US taxes it as an annuity. With no totalization agreement, US pay generally carries Social Security and Medicare tax, even from a Pakistani employer.
Taking a parent’s house as a gift
A lifetime gift of a house passes your parent’s built-up gain on to you. The house keeps the parent’s cost as its basis, for Pakistani and US tax alike. Inherit it instead, and its US basis becomes its value on the day your parent dies.
Falling off Pakistan’s Active Taxpayers’ List
Missing the due date for your Pakistani return, September 30 unless extended, keeps you off the list for that year. Pakistan’s Federal Board of Revenue issues no refunds while you are off it. Gains on property bought since July 2024 are then taxed at ordinary income tax rates, never below 15%. Since July 1, 2026, getting back on costs a Rs 25,000 surcharge, unless you undertake not to buy property for six months.
We translate your income from Pakistan into dollars and file every US form it needs.
Licensed Valim CPAs prepare and sign US returns for Pakistanis in the US, including RDA profit and rent or gains on property back home.
- We prepare the dual-status return your first US year usually needs, then every federal and state return after it. Your Pakistani return stays with your accountant there.
- We list your RDA and every other Pakistani account that counts on the FBAR. Form 8938 follows once your foreign assets pass its thresholds.
- We prepare the yearly Form 8621 each Pakistani fund requires, and Form 5471 for a Pakistani company where one is due. The instant quote prices every account and fund, and each company you own more than 20% of.
- We claim the Pakistani tax you finally owe on certificate profit, rent or a property gain as a credit on Form 1116.
- Before you sell property in Pakistan, we work out the US tax for each closing date you weigh, including one before US residency starts. We also set the quarterly estimated payments your Pakistani rent and certificate profit call for.
- When relatives in Pakistan give you more than $100,000 in a year, we file Form 3520 by your return’s due date.
- Your fee includes our response if the IRS or a state writes about a return we prepared, for instance on RDA profit.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Does the US tax what Pakistanis keep back home?
Does Pakistan have a tax treaty with the US?
Yes, a 1957 one: the US-Pakistan tax treaty, unamended, has been in force since May 21, 1959. It has no tie-breaker for someone both countries count as resident, and no general saving clause. In place of a saving clause, its residence definitions do the work. A US resident alien is no longer a treaty resident of Pakistan, which ends its student and teacher relief. A green card also ends its US exemption for a Pakistani government pension. A private pension is free of Pakistani tax once only the US treats you as resident. The exception is a pension from a superannuation fund approved or recognized under Pakistani law.
Is my Roshan Digital Account taxable in the US?
Yes, from your US residency starting date, even where Pakistan exempts the profit. The US taxes RDA profit and conventional certificate profit as interest, and Pakistan’s 10% on certificates can be claimed as a foreign tax credit. Balances and certificates in rupees, or in any currency other than dollars, also create currency gains or losses. These are generally ordinary income or loss. Dollar holdings avoid them. The IRS has not said how it treats Islamic certificates, which pay a share of a pool’s actual results.
Can my family in Pakistan send me money, and do I owe tax on it?
Yes, they can, and a gift is not income for US tax. Form 3520 is due once gifts from one person, counted with gifts from people related to them, pass $100,000 in a year. Pakistan’s income tax leaves out a gift from a relative, a group that runs from grandparents and parents to cousins and in-laws. A gift from anyone else counts as income under Pakistani law. A relative with a foreign currency account fed from abroad can generally send money from it to any country, for any purpose.
What is the Pakistan US tax treaty $5,000?
The $5,000 is the student exemption in Article XIII of the US-Pakistan tax treaty. A Pakistani resident in the US only to study pays no US tax on up to $5,000 a year of pay for work. Money sent from abroad for support and study is exempt as well. The exemption has no time limit, but it ends once a green card or the day count makes you a resident alien. A trainee of a Pakistani employer can exclude up to $6,000 for one year, and a US government program participant up to $10,000.
Sources
- US-Pakistan income tax convention (1957)
- IRS, Publication 901 (Rev. September 2024), U.S. Tax Treaties
- IRS Chief Counsel, AM 2012-002, Application of income tax treaties to lawful permanent resident employees of foreign governments
- IRS, Tax Treaty Table 2, Compensation for personal services performed in the United States exempt from US income tax
- Pakistan, Income Tax Ordinance, 2001, amended up to June 30, 2026 (FBR, archived copy)
- Pakistan, Finance Act, 2026 (FBR, archived copy)
- State Bank of Pakistan, Roshan Digital Accounts (archived copy)
- State Bank of Pakistan, Naya Pakistan Certificates FAQs (archived copy)
- State Bank of Pakistan, Foreign Exchange Manual, chapter 6 (archived copy)
- Central Directorate of National Savings, FAQs (archived copy)
- SECP, Non-Banking Finance Companies and Notified Entities Regulations, 2008, updated to May 17, 2023 (archived copy)
- Pakistan, Employees’ Old-Age Benefits Act of 1976 (archived copy)
- IRS, Publication 519 (2025), U.S. Tax Guide for Aliens
- IRS, Publication 514, Foreign Tax Credit for Individuals
- IRS, Publication 527, Residential Rental Property
- IRS, Publication 550 (2025), Investment Income and Expenses
- IRS, Publication 915, Social Security and Equivalent Railroad Retirement Benefits
- 26 U.S.C. § 7701, Definitions
- 26 U.S.C. § 901, Taxes of foreign countries and of possessions of United States
- 26 U.S.C. § 904, Limitation on credit
- 26 C.F.R. § 1.901-2, Income, war profits, or excess profits tax paid or accrued
- 26 U.S.C. § 988, Treatment of certain foreign currency transactions
- 26 U.S.C. § 121, Exclusion of gain from sale of principal residence
- 26 U.S.C. § 168, Accelerated cost recovery system (bonus depreciation)
- 26 U.S.C. § 102, Gifts and inheritances
- 26 U.S.C. § 1014, Basis of property acquired from a decedent
- 26 U.S.C. § 1015, Basis of property acquired by gifts and transfers in trust
- 26 U.S.C. § 1297, Passive foreign investment company
- 26 C.F.R. § 1.1298-1, Section 1298(f) annual reporting for PFIC shareholders (Form 8621)
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- 31 C.F.R. § 1010.306, Filing of reports
- IRS, Instructions for Form 8938
- IRS, Instructions for Form 3520 (Rev. December 2025)
- Social Security Administration, totalization agreements overview
Reviewed and updated October 2026. General information, not advice for your situation.