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How Pakistani Freelancers on Fiverr and Upwork Should Navigate Tax Filing with the FBR
Filing taxes as a freelancer in Pakistan encompasses various steps, from registration to submission. This comprehensive guide aims to assist Pakistani freelancers earning through platforms like Fiverr and Upwork in understanding the tax filing process with the Federal Board of Revenue (FBR).
Step 1: Register with the FBR
Obtain Your National Tax Number (NTN):
- Your NTN is essentially the same as your Computerized National Identity Card (CNIC) number.
- You can register online through the FBR’s IRIS portal or by visiting a Regional Tax Office (RTO).
- Complete the necessary forms, including Form 181 for voluntary income tax registration.
Step 2: Collect Required Documentation
Before you file your tax return, ensure you have the following documents at hand:
- CNIC
- Bank account statements for the relevant tax year (July 1 – June 30)
- Records of income and expenses incurred throughout the tax year
- Any applicable tax credits or deductions under current legislation
Step 3: Calculate Your Taxable Income
Track Your Earnings:
- Include all income from freelancing, consulting fees, and royalties.
- For income received through platforms like Fiverr and Upwork, maintain detailed records of all transactions.
Deduct Eligible Expenses:
- Subtract business-related expenses such as office rent, equipment purchases, utility bills, and salaries of employees.
- Note that personal expenses are not deductible.
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Step 4: File Your Tax Return
Utilize the E-Filing System:
- Register for e-filing on the FBR’s portal by creating an account using your CNIC details, mobile number, and email address.
- Log in using the credentials sent to your mobile and email.
File a Declaration:
- Select the appropriate tax year.
- Declare your total income and deduct eligible business expenses to ascertain your taxable income.
Wealth Statement:
- Provide details about personal expenses and assets acquired during the tax year.
- Reconcile these details with the declared income.
Step 5: Submit and Pay Your Taxes
Submit Your Return:
- Ensure all information is accurate before submitting your tax return through the FBR e-portal.
- The submission deadline is typically September 30 each year.
Make Your Payment:
- Utilize approved banks or online payment methods to settle any outstanding taxes.
Special Tax Rates for Freelancers
Exporting Services:
- If you provide export services and are registered with the Pakistan Software Export Board (PSEB), you might qualify for a reduced tax rate of 0.25%.
- Freelancers who export services but are not registered with PSEB can take advantage of a 1% tax rate until June 30, 2026.
Domestic Services:
- Standard individual tax rates apply, ranging from 5% to 35% based on income levels.
Record Keeping
Maintain all documentation related to your income, expenses, and tax returns for a minimum of six years, as these may be subject to audit by the FBR.
Using Payment Services
Wise and Payoneer:
- Freelancers in Pakistan can receive payments from Fiverr and Upwork through services like Wise and Payoneer.
- These platforms offer efficient methods for transferring earnings to local bank accounts with competitive exchange rates.
About ASAANTAX CONSULTANTS
At ASAANTAX CONSULTANTS, we provide comprehensive tax services tailored to freelancers, helping you navigate the complexities of tax filing effortlessly. Our expert team ensures compliance with FBR regulations, offering peace of mind so you can concentrate on your freelancing endeavors. Contact us today for professional tax advice and customized services to meet your needs.
