Am I a Pakistan tax resident? A guide for Pakistanis living in the UAE

Why residency matters

Your residency status decides what Pakistan can tax. A resident individual is taxed on worldwide income, including a UAE salary. A non-resident is taxed only on income that comes from Pakistan. For most Pakistanis working in the UAE, getting this right is the difference between a simple return and an unexpected tax demand.

The four residency tests

Under section 82 of the Income Tax Ordinance, 2001, an individual is resident for a tax year if any of these apply:

1. Presence: you are in Pakistan for 183 days or more during the tax year.
2. Government posting: you are a federal or provincial government employee posted abroad.
3. Citizen abroad, short stays: you are a Pakistani citizen and you are not present in any other single country for more than 182 days in the tax year.
4. Citizen with no other tax residence: you are a Pakistani citizen and you are not a tax resident of any other country.

Tests 3 and 4 were added by the Finance Act, 2022 and apply from tax year 2023. Before that, the older "120 days plus 365 days over four years" test had already been removed by the Finance Act, 2021.

What this means if you live in the UAE

If you live and work in the UAE for most of the year, you will usually spend more than 182 days there, which keeps you outside test 3. To stay outside test 4, you should be able to show that you are tax resident in the UAE.

Evidence worth keeping:

• a UAE Tax Residency Certificate for each relevant period;
• your Emirates ID, residence visa and employment contract;
• passport entry and exit stamps or travel records showing days in each country.

People who move between several countries, or who spend long periods in Pakistan, need to count days carefully for each tax year.

Pakistan-source income still counts

Being non-resident does not mean no Pakistani tax at all. Income that arises in Pakistan is still taxable there, for example:

• rent from property in Pakistan;
• gains on selling Pakistani property or shares;
• profit on Pakistani bank accounts and dividends from Pakistani companies.

Withholding tax on many of these is lower for people on the Active Taxpayer List. See Filer or non-filer for why that matters.

A simple yearly routine

1. At the end of each tax year (30 June), count your days in Pakistan and in the UAE.
2. Renew your UAE Tax Residency Certificate when you need evidence.
3. List any Pakistan-source income for the year.
4. Decide whether to file a return. If you have Pakistani income or investments, filing usually saves more than it costs.

FAQ