For Tax Year 2027, the reported withholding rate on an ordinary company dividend in Pakistan is 15% for an Active Taxpayers List (ATL) recipient and 30% for a recipient who is not on the ATL. The tax is calculated on the gross dividend, so the amount credited to you is normally lower. Those are general rates, not universal ones: mutual-fund distributions, qualifying power-project dividends, REIT-related payments and certain companies can fall under different rates. Check the rate for the particular dividend category and tax year before relying on a deduction.
How dividend tax works
Section 5 of Pakistan’s Income Tax Ordinance, 2001 taxes dividends by applying the relevant rate to the gross dividend. Section 5(2) says: “The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.” In practical terms, the payer generally withholds tax before paying the cash to you.
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For example, if an ordinary dividend is Rs 100,000 and the applicable rate is 15%, the tax deduction is Rs 15,000 and the cash received after that deduction is Rs 85,000. At 30%, the deduction would be Rs 30,000 and the cash received would be Rs 70,000. These examples illustrate the arithmetic only; they do not determine which rate applies to a particular payment or whether withholding settles the recipient’s final tax liability.
Tax on a dividend is not the same as tax on a gain from selling shares or redeeming a mutual-fund investment. This article concerns cash distributions treated as dividends, not those separate transactions.
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Reported dividend rates for Tax Year 2027
Tax Year 2027 runs from 1 July 2026 through 30 June 2027. The Federal Board of Revenue (FBR) lists a withholding-tax rate card for that year, updated through 30 June 2026. The rates below are reported for Tax Year 2027 by a secondary tax-news source; the official card was not retrievable for checking each row. Treat the figures as a guide, and confirm the applicable entry in the official card or with a qualified Pakistani tax adviser before acting on it. Finance Act changes can alter rates from one tax year to the next.
| Dividend category | Reported Tax Year 2027 rate | What to check |
|---|---|---|
| Ordinary company dividend and REIT dividend, unless an exception applies | 15% for an ATL recipient; 30% for a recipient not on the ATL | Confirm the payment is not covered by a special category and check the recipient’s ATL status for the relevant tax treatment. |
| Qualifying Independent Power Producer (IPP) pass-through dividend | 7.5% for an ATL recipient; 15% for a recipient not on the ATL | The reported concession is limited to a defined pass-through reimbursed under relevant power agreements; it should not be assumed for every dividend from a power company. |
| Mutual-fund dividend | 25% on the portion linked to debt securities; 15% on the portion linked to equities | The fund’s income composition matters. The fund or distribution statement may be needed to identify the relevant portions. |
| Distribution by a Special Purpose Vehicle (SPV) under REIT Regulations | 0% to a REIT scheme; 35% to other recipients | This is a specialized structural case; establish the recipient and the SPV’s status rather than treating it as an ordinary REIT dividend. |
| Dividend from a company with no tax payable because of exempt income, carried-forward business losses or tax credits | 25% | Confirm that the company meets the statutory condition before applying this rate. |
The table is not a substitute for classifying the actual payment. A company’s identity alone may not tell you whether a special rule applies: the legal character of the distribution, the payer’s circumstances, the fund’s income mix and the recipient’s status can all matter.
What “filer” and “non-filer” mean for the rate
Investors often ask for the “filer” and “non-filer” rates. The reported ordinary dividend rates are expressed by ATL status: 15% for an ATL recipient and 30% for one who is not on the ATL. “Filer” is common shorthand, but it is safer to check the relevant ATL status rather than assume that the label someone uses for their filing history decides the dividend rate.
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ATL status is also separate from tax residence. It does not establish whether you are resident in Pakistan for tax purposes, and residence should not be inferred from citizenship, a local bank account or the location of a brokerage account.
Why a mutual-fund dividend can have more than one rate
For mutual-fund dividends, the reported Tax Year 2027 rates depend on whether a portion is linked to debt securities or equities: 25% on the debt-linked portion and 15% on the equity-linked portion. The relevant fact is the composition of the fund’s income, not simply whether an investor describes the holding as an “equity fund” or a “debt fund.” A distribution may therefore require more than one calculation if it contains portions treated differently.
Use the fund manager’s distribution advice or statement to identify the gross dividend and any breakdown it provides. If the breakdown is missing or unclear, ask the manager how the distribution was classified and what amount was used for withholding. Do not invent a split or apply one rate to the entire payment just because the fund’s name suggests a particular investment strategy.
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Tax withheld at payment is money deducted and remitted in connection with the dividend. That does not, by itself, prove that the deduction is always the recipient’s final tax, always adjustable against other tax, or refundable. FBR’s general guidance on withholding explains that some deductions are a final discharge of liability while others are adjustable; treatment depends on the provision governing the particular payment.
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Keep the payer’s deduction and the tax-return treatment as separate questions. First establish the dividend’s category and the amount withheld. Then determine the treatment that applies to that category under the relevant law for the tax year. If your return position depends on whether the deduction is final or adjustable, do not assume an answer from the fact that tax was withheld or from the word “dividend” alone.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to check a dividend deduction and prepare your records
- Identify the payment. Use the dividend advice, broker statement or fund statement to record the payer, payment date, gross dividend and the amount deducted. Note whether it is an ordinary company dividend, a fund distribution, an IPP pass-through or another special category.
- Check the year and rate category. Match the payment to the tax year in which it falls and the applicable category. For a Tax Year 2027 payment, compare the reported rate with the corresponding current FBR rate-card entry before relying on the figures in this article.
- Check the withholding record. FBR says withholding information can be accessed through the Maloomat portal or through the Tax Payments tab in IRIS. Compare the entry there with the payer’s statement; investigate a mismatch with the payer or your tax adviser.
- Keep supporting statements. Retain the dividend advice and any fund breakdown or other record that explains how the gross amount was classified. These details can matter when a distribution includes different income portions or a special rate applies.
- Apply the correct return treatment. Report and claim the deduction in the way required for that particular category and tax year. Do not treat a withholding entry as proof that no further return action is required or that a refund is due.
Resident investors and dividends from abroad
Pakistan tax residence is determined under statutory tests, not just nationality or where an investment account is held. FBR’s summary of section 82 says an individual is resident for a tax year if they are present in Pakistan for at least 183 days in that year, or present for at least 120 days in that year and at least 365 days in the preceding four years. A government or provincial-government employee posted abroad is also included in the summary.
A resident taxpayer with chargeable foreign-source dividend income and foreign tax paid may be able to claim a foreign tax credit. The credit is limited to the lower of the foreign income tax paid and the Pakistan tax payable on that foreign income. Statutory conditions and timing requirements apply, so the credit is not a guaranteed dollar-for-dollar refund of foreign withholding.
For a foreign dividend, keep the foreign payer’s statement and evidence of tax paid, and establish whether the income is chargeable and whether the conditions for the credit are met. The reported domestic dividend rates in the table do not establish the rate or withholding treatment for a non-resident, nor do they settle how a specific foreign dividend is treated. Obtain advice based on the investor’s residence, the source and type of income, and the applicable provisions.
Common mistakes to avoid
- Using one rate for every dividend. Ordinary dividends are the general case; the reported rates include distinct rules for mutual funds, qualifying IPP pass-throughs, SPV distributions and certain companies.
- Calculating tax on the cash received. Section 5(2) specifies the gross dividend as the tax base, not the net amount left after withholding.
- Treating ATL status as a complete classification. ATL status matters for reported ordinary and qualifying IPP rates, but it does not replace the rules for other categories or determine tax residence.
- Assuming every withholding deduction is final or adjustable. FBR says treatment varies; check the relevant legal provision rather than generalizing.
- Applying dividend rules to a sale or redemption. A dividend distribution and a gain on selling shares or redeeming a fund investment are different kinds of income and should not be conflated.
- Carrying a rate into another year without checking. The figures here are reported for Tax Year 2027; a later Finance Act and rate card may change them.
Bottom line
For Tax Year 2027, the reported ordinary dividend withholding rate is 15% for an ATL recipient and 30% for a recipient not on the ATL, calculated on the gross dividend. Before using that as your answer, classify the payment, check for a special rate, verify the current FBR rate card and establish whether the withholding is final or adjustable for your circumstances.
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