Pakistan lets residents own shares listed abroad, but on a short leash: a yearly cap, a single designated bank branch, returns to the State Bank and a rule that income must come home in rupees. Layered on top are a 1957 tax treaty that does little for individual investors and Federal Board of Revenue rules on foreign income and assets. This page works through each layer for residents, then explains where Roshan Digital Accounts fit for Pakistanis living abroad. The guide to investing in US stocks from abroad covers the rules that apply in every country. Pakistani law decides what you may buy and how it is taxed, and both the State Bank and the FBR revise their rules often, so confirm your plan with your bank and a tax adviser before you send money.
How much can a resident send abroad for US shares?
A resident individual can buy shares listed abroad up to USD 25,000 per calendar year, with no more than 1% of any one company, under chapter 20 of the State Bank's Foreign Exchange Manual.
This is a general permission, so no individual approval is needed, but every remittance has to go through one branch of an authorised bank that you designate for the purpose, and the State Bank's Exchange Policy Department acknowledges the designation. Moving to another branch later needs a no-objection certificate from the old one. The limit runs by calendar year, January to December, not by the July-to-June tax year, and the 1% cap on your stake in any one company matters only for the smallest listed firms.
The basic terms in the same chapter add conditions. The money must be legitimate and tax-paid, the investor should be financially sound with a clean loan repayment record, and you must be on the FBR's Active Taxpayers List. Investment is allowed only in countries that permit profits, dividends and capital to be repatriated, which the United States does. The permission speaks of shares of listed companies and says nothing about exchange-traded funds, so ask your designated bank how it treats a US-listed ETF before you buy one.
What paperwork does the State Bank expect after you invest?
Within one month of buying, you must send the State Bank a return on Form V-100 through your designated bank, along with documents showing the shares were acquired.
The manual also asks for the investee company's audited financials every year, a rule written with business investments in mind, so ask your bank what it needs for shares in a large listed company. The bigger practical rule is repatriation. Dividends and sale proceeds, including capital gains, must come back to Pakistan through normal banking channels, where the bank converts them into rupees, and you then file the bank's proceeds realisation certificate with the State Bank through your designated branch. The money can't be credited to a foreign currency account or used to buy Pakistani securities on a repatriable basis, so a US portfolio can't build up a dollar balance for you.
Keep a file for each purchase and sale: the remittance advice, broker confirmations, the V-100 copy and every proceeds realisation certificate. The designated branch must keep a full record of your investments and repatriations, and the FBR will want the same figures for your return. The US side asks far less: an investor with no US business has to file Form 1040-NR only if some of the US tax owed was not withheld, which rarely happens when the broker takes the full 30% from every dividend.
Does the US-Pakistan treaty lower withholding?
Not for individual investors: the 1957 treaty cuts the US rate on dividends only for Pakistani companies that control more than half of the paying US company.
| Country | Tax treaty | Dividends (most investors) | Dividends (10%+ corporate owners) | Interest |
|---|---|---|---|---|
| Pakistan | Yes | 30% | 15% | 30% |
So the default, 30% on US-source dividends, unless a tax treaty sets a lower rate, applies in full to a resident individual's dividends from US shares and US-listed funds. You still need Form W-8BEN, which confirms to the broker that you are not a US person; the W-8BEN guide explains it. The treaty's main use for investors lies on the Pakistani side: Article XV commits Pakistan to allow a credit for US tax, which section 103 of the Income Tax Ordinance delivers. Withholding by country compares Pakistan with treaty partners that get lower rates.
How does Pakistan tax US dividends and gains?
Pakistan taxes the dividends at 15%, less a credit for US tax, and taxes gains on US shares under its general capital gains rules.
The 15% is the general rate on dividends under section 5 of the Income Tax Ordinance, the same rate the FBR's rate card for tax year 2027 shows for most dividends paid in Pakistan. Section 103 then allows a credit for foreign tax up to the Pakistani tax on the same income, worked out separately for each head of income. Because the US takes 30% and Pakistan asks 15%, the credit normally wipes out the Pakistani tax, but the extra US tax is simply lost: section 103 says unused credit can't be refunded or carried to another year. Claim the credit in your return and keep your broker's year-end statement of US tax withheld as evidence.
Gains work differently. The separate regime in section 37A, with its own rates, covers securities such as shares of public companies, and the Ordinance defines a public company by its listing on a registered stock exchange in Pakistan, so shares listed only in the US fall outside it. Their gains are taxed as ordinary capital gains under section 37, at your normal rates. The same definition also lists units of exchange-traded funds without saying where the fund must be listed, so ask an adviser how gains on a US-listed ETF will be treated. The US usually takes nothing on a nonresident's share gains, so there is no foreign tax to credit, and because Pakistan measures the gain in rupees, a fall in the rupee raises your taxable gain even if the dollar price is flat.
Reporting comes on top. Your wealth statement must include foreign assets, and a resident individual with foreign income of US$10,000 or more, or foreign assets worth US$100,000 or more must also file a foreign income and assets statement under section 116A. Reporting US investments at home compares these duties with other countries'.
Worked example: $25,000 of US shares bought by a resident Pakistani
- Remitted through the designated branch: $25,000, the full calendar-year allowance, or about PKR 7 million at an illustrative 280 rupees per dollar.
- A 1.3% dividend yield pays $325 a year. The US withholds 30%, or $97.50, and $227.50 arrives, which must come home and be converted into rupees.
- Pakistani tax at 15% on the gross $325 is $48.75, and the credit for US tax covers it in full, so nothing more is due.
- The other $48.75 of US tax is lost, because unused credit is neither refunded nor carried forward.
- Total tax on the dividend: $97.50, or 30%.
Where do Roshan Digital Accounts fit?
They let Pakistanis abroad, and residents with declared foreign assets, bank and invest in Pakistan, so they aren't a route into US shares.
The accounts come in two forms. A foreign currency value account can be opened by a non-resident Pakistani, a non-resident holder of a Pakistan Origin Card, a government employee posted abroad, or a resident who has declared assets held abroad in the wealth statement filed with the latest tax return; residents have to visit a branch to open one. A rupee value account is for non-residents and officials posted abroad only. From the rupee account you can buy Pakistani government securities, shares and units listed on the Pakistan Stock Exchange, mutual funds and property; from the foreign currency account, dollar, sterling or euro Naya Pakistan Certificates and deposits. Funds can be sent back abroad at any time without approval, apart from a three-year wait on gains from property.
Tax is simpler than for residents. Profit on Naya Pakistan Certificates carries a final 10% tax, and non-residents pay a final 15% on gains and on most dividends from Pakistani shares and mutual funds, with no return to file and no doubling for missing the Active Taxpayers List. The State Bank's figures show how the accounts are used: at the end of September 2026, holders had about $2.1 billion in Naya Pakistan Certificates against $153 million in equity investments.
For a Pakistani living in the Gulf, Europe or North America, US shares are bought from the country of residence, under that country's rules. The guide for UAE residents covers one common case, and sending money from the UAE to Pakistan covers the remittance side.
Summary of SBP, FBR and IRS rules
The table collects the rules for a resident individual in one place.
| Rule | What applies to a resident Pakistani | Authority |
|---|---|---|
| Annual limit | USD 25,000 per calendar year, at most 1% of any company | State Bank, Foreign Exchange Manual |
| Channel | One designated branch of an authorised bank | State Bank |
| Reporting after purchase | Form V-100 return within one month | State Bank |
| Income and sale proceeds | Brought home and converted to rupees, not held in foreign currency accounts | State Bank |
| US withholding on dividends | 30% for individuals; the treaty's 15% needs a controlling company | IRS and the 1957 treaty |
| Pakistani tax on dividends | 15%, less a credit for US tax up to that amount | FBR, sections 5 and 103 |
| Pakistani tax on gains | Normal rates under section 37 | FBR |
| Foreign asset reporting | Wealth statement, plus a section 116A statement above the thresholds | FBR |
| US estate tax | Above $60,000 of US assets, up to 40%, with no treaty | IRS, Form 706-NA |
Is US estate tax a concern for Pakistanis?
Yes, once US holdings pass $60,000 of US-situated assets, because Pakistan has no estate tax treaty with the United States and the 1957 convention covers income tax only.
At the full $25,000 a year, a resident's US portfolio passes $60,000 during the third year even without growth, so the question arrives sooner than many expect. Rates reach 40% and the estate's credit is only $13,000, which offsets the tax on the first $60,000 of US assets. The executor files Form 706-NA within nine months, and heirs usually wait for an IRS transfer certificate before the broker releases anything. The estate tax guide for nonresidents explains the process.
Worked example: US estate tax on $150,000 of US shares
- US-situated assets at death: $150,000 of US-listed shares.
- Tentative tax from the IRS rate table: $38,800.
- After the $13,000 credit, $25,800 is due, about 17% of the holding.
- Above $150,000, each extra $10,000 of US assets adds $3,200 of tax, at the 32% rate.
Rupee, repatriation and other risks
The rupee is the risk most residents feel first. Your US shares are priced in dollars, but every dividend and every sale comes home as rupees at the bank's rate on the day; the mid-market rate today is 1 USD = 276.73 PKR (Nov 2, 2026). The table converts rupee amounts into dollars at that rate and at typical bank margins.
| You send | At the mid-market rate | With a 1% markup | With a 3% markup |
|---|---|---|---|
| PKR 1,000,000 | $3,614 | $3,577 | $3,505 |
| PKR 3,000,000 | $10,841 | $10,732 | $10,516 |
| PKR 7,000,000 | $25,295 | $25,042 | $24,536 |
A falling rupee raises the rupee value of your holdings, and your taxable gain, while a rising rupee does the reverse. Currency risk in US assets explains the effect, and the currency converter shows the live pair. Other risks to weigh:
- Rule changes. The $25,000 allowance is a general permission the State Bank can change by circular, and the FBR's rates can change with each year's Finance Act, so check both before each year's remittance.
- Unlicensed platforms. The Securities and Exchange Commission of Pakistan has warned more than once about apps and websites that advertise on social media, pose as licensed brokers, offer trading in local or international shares, show fake profits and then block access when investors ask for refunds. It says securities trading in Pakistan can only be done through SECP-licensed brokers. Money transfer scams lists the warning signs.
- Repatriation friction. Because income must come home and be converted, you can't reinvest dividends abroad, and each payment may bring a bank charge and a conversion margin.
- Concentration. A handful of US shares is a single-market bet; types of investment risk explains diversification.
- Broker protection. SIPC covers customers of US broker-dealers whatever their residence; FDIC vs SIPC explains its limits.
Pakistani rules on investing abroad combine foreign exchange law, tax law and your bank's own procedures, so confirm the details with your designated bank and a tax adviser before each year's remittance.