Tax on trading profits

How trading profits are taxed in Pakistan

Profits from forex and derivatives trading by Pakistani residents are generally taxed as income, but the exact treatment depends on how the gain is classified. Where the profit is treated as a capital gain on movable assets other than exchange-traded securities, it is taxed at the individual’s normal income-tax slab rates. Gains on listed securities and on foreign shares or mutual funds carry their own specific rates, with foreign shares and mutual funds taxed at a flat rate of about 15% according to PwC.

This connects directly to Is trading legal here and to Deposits and withdrawals.

What the tax authority expects from residents

The Federal Board of Revenue (FBR) is the tax authority in Pakistan. Residents are taxed on worldwide income, not only on what they earn inside the country. If foreign income exceeds USD 10,000 or foreign assets exceed USD 100,000 in the tax year, a Foreign Income and Assets Statement must be filed. This obligation applies regardless of where the trading account is held or which broker was used.

Crypto gains and their separate rate

Crypto gains are subject to a flat 15% capital gains tax as of the review. This is a separate treatment from general income-tax slab rates and from the rate applied to foreign shares and mutual funds. The rate comes from the same review that covers other asset classes, so it should be checked against current FBR guidance before relying on it.

The legal position of retail forex in Pakistan

Retail forex and CFD trading is not criminalised, but there is no local licensing framework for it. SECP does not issue retail forex or CFD broker licences, and SBP does not allow margin-based currency trading inside Pakistan. In practice, residents trade through offshore brokers regulated abroad, such as those under FCA, ASIC, or CySEC supervision. That route is lawful only when the account is funded through legitimate banking channels. Using Hawala or Hundi, or using unregulated platforms that bypass the banking system, is illegal. USD/PKR is rarely offered as a tradable pair.

Where the tax and legal risks overlap

The tax treatment of offshore trading gains depends partly on how the money moves. Funds sent through informal channels can create legal exposure beyond tax liability, since those methods are illegal under the rules described above. SECP has reiterated crackdowns on unlicensed currency and commodity-futures operators, so the status of the platform matters as much as the tax position of the gain. A profit that is taxable in Pakistan remains reportable even if the broker is abroad and the account is denominated in a foreign currency.

Common questions from traders in Pakistan

Do I pay tax on profits from an offshore forex broker?

Yes, if you are a Pakistani resident. Residents are taxed on worldwide income, so gains made through an offshore broker are reportable to the FBR. The rate depends on how the gain is classified under the rules for income or capital gains.

Is forex trading legal in Pakistan?

Retail forex trading itself is not criminalised, but there is no local licence for it. Trading through an offshore broker regulated abroad is lawful only when funded through legitimate banking channels. Using Hawala, Hundi, or unregulated platforms that bypass the banking system is illegal.

What rate applies to crypto gains?

Crypto gains are subject to a flat 15% capital gains tax as of the review. This is a separate rate from the slab rates that apply to income and from the specific rates for listed securities or foreign shares and mutual funds.

When do I need to file a Foreign Income and Assets Statement?

You must file it if your foreign income exceeds USD 10,000 or your foreign assets exceed USD 100,000 in the tax year. The threshold applies to the tax year, and the statement is filed with the FBR.

Which authority handles tax on trading profits?

The Federal Board of Revenue (FBR), Government of Pakistan, is the tax authority. Its website is the primary source for current forms, rates, and filing requirements.