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Is Forex Trading Taxable in Pakistan?

Forex trading in Pakistan is completely legal and has gained notable popularity among local residents as the country’s economy expands.

  

Choose your quick section of our is Forex Trading Taxable in Pakistan below

A quick Overview of our is Forex Trading Taxable in Pakistan Review:

 

With a population of approximately 220,000,000, Pakistan represents an enormous growth market, for both Forex brokers and traders alike.

 

Forex legislation in Pakistan

 

In Pakistan, there are practically no restrictions on trading forex.

 

Forex Brokers in Pakistan generally accept deposits in USD and a Forex trader needs to be a tax filer in order to be accepted. This is due to the Finance Bill which was passed in 2018, in order to limit tax evasion, money laundering, and capital flight potential. In addition, trading cryptocurrencies are declared as illegal by the State Bank of Pakistan (SBP).

 

Financial regulators in Pakistan

 

The main regulatory authority for the forex market  in Pakistan is the Securities and Exchange Commission of Pakistan (SECP). The main regulations imposed on forex trading are in the form of broker regulations under the Securities Act, 2015. International brokers are also permitted to offer their services in the country.

 

Forex payment methods in Pakistan

 

Popular and available Payment methods in Pakistan can range from Credit and Debit Cards, Wire Transfers or  options such as WebMoney, Cashu, Skrill and Neteller.

 

Taxation on Forex trading in Pakistan

 

Forex trading in Pakistan is subject to tax as in accordance to rules devised by the Federal Bureau of Revenue (FBR). FBR divides taxation into two categories.

 

  • An individual who files and pays their annual taxes will be liable to fewer tax deductions. The maximum tax based on profit is 15%.
  • An individual who does not file their annual taxes will be subjected to a maximum tax of 35% which is the current capital gains tax rate.

 

Capital gains tax in Pakistan

 

Capital gains on the sale, exchange, or transfer of movable capital assets in Pakistan are subject to tax. Capital gains on the sale of fixed property is also subject to tax, and will be dependent on upon the amount of gain and holding period. Capital Gains tax in Pakistan can range from 2.5 – 15%.

 

Income tax in Pakistan

 

In Pakistan,  tax is levied on its residents worldwide income. A non-resident individual however, will be taxed only on Pakistan-sourced income.  Personal Income Tax in Pakistan can range from 5 – 35%.

 

Regulated Forex Brokers accepting  Pakistani traders

 

IG

 

IG Group was founded in 1974 and is regulated by the Financial Conduct Authority (FCA) in the U.K. and the Australian Securities and Investment Commission (ASIC) in Australia.

 

Pros and Cons

 

Pros Cons
Used by 178,000+ traders Inactivity Fee
Established in 1974 Limited range of instruments
Regulated by Financial Conduct Authority and ASIC
Min. deposit from $250

 

The country of a traders residency will determine which account type they can open. In most countries, they will only be able to trade forex, CFDs and options.  Traders can choose between two trading platforms, IG’s proprietary trading platform or MetaTrader 4.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit Payoneer
Guaranteed stop loss

 

Customer Service is available 24/7 via Phone, Live Chat and Email.

 

Saxo Bank

 

Saxo is a globally regulated, multi-asset class broker which offers traders the option to trade on more than 40,000 instruments covering Forex, CFDs, Stocks, Options, ETFs, Commodities, Futures, Bonds and Mutual Funds from a single account across multiple platforms including their own – SaxoTraderGO and professional-grade SaxoTraderPRO.

 

Pros and Cons

 

Pros Cons
Segregates client funds Doesn’t allow hedging
Established in 2012 Limited range of instruments
Regulated by Financial Conduct Authority Not ASIC Regulated
Min. deposit from $6,500

 

The Saxo Group is regulated in 15 jurisdictions including authorisation from the UK Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the Financial Services Agency of Japan (FSA) and many more.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Offers STP Mini account Bank Transfer
Low min deposit Standard account Payoneer
ECN account

 

Customer support is available in nearly 30 different languages via phone, email and an FAQ section.

 

Interactive Brokers

 

Interactive Brokers was founded in 1978 and is regulated by multiple financial authorities including the UK’s Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC).

 

Interactive Brokers offers many account types, which fall into two big groups:

 

  • accounts for individual traders and investors
  • accounts for institutions

 

Pros and Cons

 

Pros Cons
Low trading cost Pro users incur an account maintenance fee if multiple trades are not made
Invest globally in a multitude of products via a single account Not everyone is eligible to open an IBKR Lite account
No minimum balance required
Tools to bring your trading to the next level

 

Trading benefits

 

Tradable Securities Accounts Offered Funding Methods
Stocks Lite Bank Transfer
Fractional Shares Pro
Bonds
Mutual Funds
ETFs
Options

 

Traders can choose between two different web trading platforms:  The Client Portal and Webtrader and IBKR Mobile, Interactive Brokers’s mobile trading platform, is available both for iOS and Android.  Users can trade on Stock, Forex, Option and Futures – to name but a few.

 

Customer Service is available 24/7 via Live Chat, Phone and Email.

 

AvaTrade

 

AvaTrade is an online broker which was founded in 2006 and offers Forex, CFDs, Spread Betting and Social Trading and is a global broker with their head office situated in The British Virgin Islands. AvaTrade is regulated in Europe, the British Virgin Islands, Australia, Japan, and South Africa by ASIC, CySEC and FCA.

 

Pros and Cons

 

Pros Cons
Used by 200,000+ traders Doesn’t offer VPS
Established in 2006 Not FCA Regulated
Regulated by Central Bank of Ireland, ASIC, IIROC, FSA, FSB, UAE and BVI
Min. deposit from $100

 

For those who are looking to start out with AvaTrade will need a minimum deposit of $250 and a demo account is available for those who want to get acquaint with the popular MT4 forex trading platform.  AvaTrade also offer mobile apps for Android and iOS.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Micro account Bank Transfer
Low min deposit Mini account PayPal
Standard account Skrill
Islamic account Payoneer
Neteller

 

Customer support is available by email, phone, or live chat.

 

XM Group

 

XM Group (XM) is a group of regulated online brokers regulated by the Cyprus Securities and Exchange Commission.

 

Pros and Cons

 

Pros Cons
• Low stock CFD and withdrawal fees • Limited product portfolio
• Easy and fast account opening • Average forex and stock index CFD fees
• Great educational tools • No investor protection for non-EU clients

 

XM offers traders more than 1000 financial instruments to trade on both the MT4 and MT5 platforms, including Forex Trading, Stocks CFDs, Commodities CFDs, Equity Indices CFDs, Precious Metals CFDs and Energies CFDsForex trading is available on over 55 pairs, including the major USD, GBP, EUR and JPY pairs.  Traders must take note that XM does not offer binary options or futures.

 

Trading benefits

 

Trading Features Accounts Offered Funding Methods
Negative Balance Protection Micro Wire Transfer
Low Spreads Standard Credit/Debit
Low Commission XM Zero Neteller
Hedging Allowed UnionPay
Scalping Allowed WebMoney
Qiwi

 

Customer Service is available via live chat, Phone and email support.

 

FP Markets

 

FP Markets is a global, online broker regulated by the Australian ASIC and the Cypriot CySEC which was founded in 2005 and offer Forex trading and has a head office situated in Australia. When starting off with FP Markets traders will need to make a minimum deposit of $100 and a demo account is on offer with a wide variety of instruments and currency pairs on offer.

 

Over 100 instruments and over 60 currency pairs in total is on offer, on the popular MT4 forex trading platform.  FP Markets also offers traders mobile apps for Android and iOS.

 

Pros and Cons

 

Pros Cons
Low Forex Fees High Stock CFD fees
Easy Account Opening Limited Product Portfolio
Quick Deposit and Withdrawal Outdated Platform

 

Trading benefits

 

Trading Benefits Accounts Offered Funding Methods
Allows scalping Mini Bank Transfer
Allows hedging Standard Credit/Debit
Offers STP ECN Electronic Wallets
Low min deposit STP
Offers Negative Balance Protection Managed

 

All accounts support a wide range of languages including English, Spanish, Portuguese, Romanian, Bulgarian, Arabic, Russian, French, Italian, Greek, Philippines, Latvian, Polish, Indonesian, Thai, Malay, German, Vietnamese.

 

Customer Service is available via email, phone and live chat.

 

IC Markets

 

IC Markets is a regulated Forex ECN and CFD broker which offers more than 236+ financial instruments across Forex, Commodities, Indices, Bonds, Cryptocurrency, Stocks and Futures on the MetaTrader 4, MetaTrader 5 and cTrader platforms for desktop, web and mobile.  IC Markets is regulated by the Australian Securities and Investments Commission (ASIC), the Cyprus Securities and Exchange Commission (CySEC), as well as the Seychelles Financial Services Authority (FSA).

 

Pros and Cons

 

Pros Cons
Segregates client funds Limited range of instruments
Established in 2007 Not FCA Regulated
Regulated by ASIC
Min. deposit from $200

 

IC Markets offers traders three main types of live trading accounts to choose from, including  Raw Islamic swap-free accounts and the use of a free demo trading account.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit Zero spread account Skrill
ECN account Neteller
Islamic account

 

Customer support is available 24/7 via Live Chat, Phone and Email.

 

Tickmill

 

Tickmill is a Forex and CFD broker with licences from the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Seychelles Financial Services Authority (FSA).

 

Pros and Cons

 

Pros Cons
Segregates client funds Limited range of instruments
Established in 2014 Not ASIC Regulated
Regulated by Financial Conduct Authority
Min. deposit from $25

 

Tickmill offers trading on 80+ markets covering Forex, Indices, Commodities and Bonds on the MetaTrader 4 trading platform for Windows, Mac, Web, Android and iOS.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account Neteller
Low min deposit Zero spread account
ECN account
Islamic account

 

Multilingual client service is available via Telephone, Email, Online Contact Form and Live Chat.

 

FXPro

 

FXPro is an online broker which was founded in 2006 and offers Forex, Share Dealing, Spot Indices, Futures, Spot Metals and Spot Energies tradingFXPro is a global broker with a head office located in the UK. FXPro is regulated by CySEC and operates under the CIF license number 078/07. As a CySEC regulated brokerFXPro is also a member of the Investor Compensation Fund schemeFXPro provides traders with access to top-tier liquidity and advanced trade execution with no dealing desk intervention and a starting account will need a minimum deposit of $100.

 

Pros and Cons

 

Pros Cons
Easy Account Opening Only CFDs and Forex
Excellent Customer Service High Trading Fees
Free Deposit and Withdrawal Inactivity Fee

 

With FXPro, the minimum and maximum trade requirements vary depending on the trader and the instrument chosen.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Micro account Credit cards
Allows hedging Mini account Bank Transfer
Low min deposit Standard account PayPal
Negative Balance Protection Islamic account Payoneer
Neteller

 

FXPro offers customer support 24 hours a day, 5 days a week via Live Chat, Telephone and Email in a variety of different languages including English, Spanish, French, Polish, Malay, Arabic, Chinese, Greek, Hungarian, Japanese, Korean, Russian, Thai, Vietnamese, Indonesian and others.

 

Vantage FX

 

Vantage FX is a Forex ECN and CFD broker which offers traders the ability to trade on 120+ tradable assets across Currencies, Indices, Commodities and U.S and Hong Kong Share CFDs on the MetaTrader platform for Mac, PC, iOS and Android and other social trading platformsVantage FX is authorised and regulated by the Cayman Islands Monetary Authority (CIMA) under the name Vantage International Group.

 

Pros and Cons

 

Pros Cons
Strict Regulation No US Clients
Segregated Client Funds Restricted Leverage
300+ CFD Trading Instruments No Fixed Spread Accounts

 

Vantage FX offers traders access to the MetaTrader 4 and MetaTrader 5 trading platforms for Windows, Mac, Android and iOS.

 

Trading benefits

 

Trading Features Accounts Offered Funding Methods
Pro Trader Tools Standard Wire Transfer
ZuluTrade Raw Credit Cards
MAM/PAMM Accounts Pro Neteller
Commission Free Accounts UnionPay

 

Customer support is available 24 hours a day, 5 days via phone, email, live chat and remote TeamViewer in English, Mandarin, Thai and Vietnamese.

 

  

 

Conclusion

Pakistan represents a massive growth market and the improvement of economic conditions has notably boosted the growth rate of online Forex trading in Pakistan. While this will attract multiple new traders, it will also become more profitable for scammers. Pakistani Investors must conduct their due diligence when selecting a Forex broker, understanding what their chosen firm has on offer and at what rate their trading efforts will be subjected to Tax.

 

Author Details

Louis Schoeman

Louis Schoeman

Featured Forex and Stocks writer

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