How Pakistani Freelancers on Fiverr and Upwork Should File Taxes with FBR

Filing taxes as a freelancer in Pakistan involves several steps, from registration to submission. Here’s a comprehensive guide to help Pakistani freelancers who earn through platforms like Fiverr and Upwork navigate the tax filing process with the Federal Board of Revenue (FBR).

Step 1: Register with FBR

Obtain a National Tax Number (NTN):

• Your NTN is essentially your Computerized National Identity Card (CNIC) number.
• Register online through the FBR’s IRIS portal or visit a Regional Tax Office (RTO).
• Fill out the necessary forms, such as Form 181 for voluntary income tax registration.

Step 2: Gather Required Documentation

Before filing your tax return, ensure you have the following documents ready:

• CNIC
• Bank account statements for the relevant tax year (July 1 – June 30)
• Record of income and expenses incurred during the tax year
• Any tax credits or deductions available under current legislation

Step 3: Calculate Your Taxable Income

Track Your Income:

• Include all earnings from freelancing, consulting fees, and royalties.
• For income received through platforms like Fiverr and Upwork, ensure you keep detailed records of all transactions.

Deduct Eligible Expenses:

• Deduct business-related expenses such as office rent, equipment purchases, utility bills, and salaries of employees.
• Personal expenses are not deductible.

Step 4: File Your Tax Return

Use the E-Filing System:

• Register for e-filing on the FBR’s portal by creating an account with your CNIC details, mobile number, and email address.
• Log in using the credentials sent to your mobile and email.

File a Declaration:

• Choose the appropriate tax year.
• Declare your total income and deduct eligible business expenses to determine your taxable income.

Wealth Statement:

• Provide details of personal expenses and assets acquired during the tax year.
• Reconcile these with the income declared.

Step 5: Submit and Pay Taxes

Submit Your Return:

• Ensure all details are accurate and submit your tax return through the FBR e-portal.
• The deadline for submission is typically September 30 each year.

Make Payment:

• Use approved banks or online payment methods to pay any taxes due.

Special Tax Rates for Freelancers

Exporting Services:

• If you export services and are registered with the Pakistan Software Export Board (PSEB), you may benefit from a reduced tax rate of 0.25%.
• Freelancers exporting services but not registered with PSEB can benefit from a 1% tax rate until June 30, 2026.

Domestic Services:

• Standard individual tax slabs apply, with rates varying from 5% to 35% based on income.

Record Keeping

Maintain all records of your income, expenses, and tax returns for at least six years, as they 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 services provide efficient ways to transfer earnings to local bank accounts with competitive exchange rates.

Conclusion

Filing taxes as a freelancer in Pakistan involves several steps, but by following this guide and keeping meticulous records, you can ensure compliance and avoid legal complications. Consider consulting a tax advisor for personalized guidance and to stay updated on any changes in tax regulations.

About ABH Consultants

At ABH Consultants, we offer comprehensive tax services to freelancers, helping you navigate the complexities of tax filing with ease. Our professional team ensures your compliance with FBR regulations, providing peace of mind so you can focus on your freelancing work. Contact us today for expert tax advice and services tailored to your needs.