For Tax Year 2027, the reported withholding rate on an ordinary company dividend in Pakistan is 15% for an Active Taxpayer List (ATL) recipient and 30% for a non-ATL recipient. The rate is applied to the gross dividend, so the tax is generally deducted before the investor receives the cash. Those are not universal rates: mutual-fund income, qualifying Independent Power Producer (IPP) distributions, and certain REIT or company categories have different reported treatments.
Tax Year 2027 runs from 1 July 2026 through 30 June 2027. The Federal Board of Revenue (FBR) lists a current-year withholding tax rate card updated through 30 June 2026. Because the detailed rates below are reported rates and the exact card should be checked for the relevant category, confirm the current official schedule before filing or relying on a special rate.
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How the tax is calculated
Section 5 of Pakistan’s Income Tax Ordinance, 2001 provides that tax on a dividend is computed by applying the relevant rate to its gross amount. In practical terms, the calculation starts with the dividend before tax is withheld—not the cash credited to the investor afterward.
For example, on a hypothetical ordinary dividend of Rs 10,000, a 15% deduction would be Rs 1,500 and the investor would receive Rs 8,500. At 30%, the deduction would be Rs 3,000 and the net payment Rs 7,000. These examples illustrate the arithmetic only; they do not establish which category or rate applies to a particular payment.
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The company, fund, or other payer normally withholds tax when it pays or credits the dividend. This deduction is distinct from a capital gain on selling shares or redeeming a mutual-fund investment. Dividend tax concerns a distribution of income; a sale or redemption is a separate transaction with its own tax treatment.
Reported dividend rates for Tax Year 2027
The following rates are reported for Tax Year 2027. FBR’s index confirms that a current-year rate card exists, but the detailed current card should be consulted to confirm each rate and the statutory conditions for the payment. ATL status affects the ordinary company-dividend rate, but it does not replace the category-specific rules.
| Dividend category | Reported Tax Year 2027 rate | What determines the treatment |
|---|---|---|
| Ordinary company dividend and REIT dividend, unless an exception applies | 15% for ATL recipients; 30% for non-ATL recipients | Whether the payment falls within the ordinary category and the recipient’s ATL status. |
| Qualifying IPP pass-through dividend | 7.5% for ATL recipients; 15% for non-ATL recipients | A narrowly defined pass-through reimbursed under the relevant power agreements; an IPP label alone does not establish eligibility. |
| Mutual-fund dividend attributable to debt securities | 25% | The portion of fund income linked to debt securities. |
| Mutual-fund dividend attributable to equities | 15% | The portion of fund income linked to equities. |
| Distribution from an SPV under REIT Regulations | 0% to a REIT scheme; 35% to other recipients | The recipient and the specialized legal structure of the distribution. |
| Dividend from a company with no tax payable because of exempt income, carried-forward business losses, or tax credits | 25% | Whether the company meets the statutory condition for this special category. |
These categories are not interchangeable. A mutual fund’s rate depends on the composition of the relevant income, not simply on the fact that an investor holds a mutual-fund unit. Likewise, an IPP’s business identity does not by itself prove that a payment is the qualifying pass-through described for the lower rate. For an SPV distribution, the distinction between payment to a REIT scheme and payment to another recipient is material.
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- Find the gross amount. Use the dividend advice, broker record, fund statement, or other payer statement. Record both the declared dividend and the tax deducted rather than treating the net bank credit as the dividend amount.
- Identify who paid it and what it represents. Check whether it came from an ordinary company, a mutual fund, a qualifying IPP pass-through, or a REIT-related structure. If the statement does not explain the category, ask the payer or fund manager for the relevant classification and supporting breakdown.
- Check ATL status for the payment and tax year. The reported ordinary-company and qualifying IPP rates distinguish ATL and non-ATL recipients. Do not assume the ordinary rates apply to a special category merely because of ATL status.
- For a mutual fund, obtain the income breakdown. The reported rates differ for debt-linked and equity-linked portions. If a statement gives only one total dividend and does not show the composition, do not infer a split from the fund’s name or investment objective.
- Compare the payment with the applicable FBR rate card and statutory provision. Confirm the tax-year schedule and the conditions for any exception before using a reported rate in a return or treating a deduction as correct.
If a payment appears to have been taxed at a different rate from the relevant category, first check whether the payer has classified the distribution differently or whether the recipient’s ATL status was reflected. Keep the statement and seek clarification from the payer before assuming the deduction is an error.
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What ATL and non-ATL mean for dividend withholding
ATL means Active Taxpayer List. In the reported Tax Year 2027 ordinary dividend rates, the withholding percentage is higher for a recipient who is not on the ATL: 30% rather than 15%. The qualifying IPP pass-through rates also differ by ATL status, at 15% for a non-ATL recipient and 7.5% for an ATL recipient.
These differences make it important to check status in relation to the relevant tax year and payment rather than relying on a general description such as “filer” or “non-filer.” The category of dividend still matters: the supplied rate categories specify different treatments for mutual-fund components, SPV distributions, and dividends from certain companies. The ordinary ATL comparison should not be extended to those categories without checking the applicable rule.
Is dividend withholding the final tax?
Not necessarily. FBR’s general withholding-tax guidance explains that some deductions are a final discharge of tax while others may be adjustable against a person’s final liability. The treatment depends on the relevant statutory provision and dividend category. Therefore, a withheld amount should not automatically be described as refundable, adjustable, or the investor’s complete tax obligation.
Investors should preserve the gross dividend and withholding records and report the payment according to the treatment that applies to that specific category and tax year. If the deduction is adjustable under the governing provision, the tax return process may require accounting for it against the relevant liability. If the deduction is final, that does not mean every other dividend or income item has the same treatment.
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How to check dividend withholding in FBR records
FBR says taxpayers can access withholding information through the Maloomat portal or through the Tax Payments tab in IRIS. Use those records as a cross-check against the payer’s documentation, not as a substitute for identifying what the dividend was and how it should be treated.
- Collect the dividend advice, broker statement, or fund statement showing the gross distribution and tax withheld.
- Sign in to the FBR Maloomat portal or IRIS and locate the withholding information; in IRIS, use the Tax Payments tab.
- Compare the FBR entry with the payer’s statement. Check the amount, payer, and relevant period, and retain evidence of any mismatch.
- Use the appropriate tax-year return treatment for the dividend category. If the category or final-versus-adjustable status is unclear, verify it against the applicable provision or obtain qualified tax advice before filing.
Resident investors and foreign dividends
Foreign-source dividends raise two separate questions: whether the investor is resident in Pakistan for the tax year and whether a foreign tax credit is available for tax already paid abroad. Residence is determined by statutory tests, not merely by citizenship, the location of a brokerage account, or the country from which the dividend was paid.
FBR’s summary of section 82 says an individual is resident for a tax year if the individual was present in Pakistan for at least 183 days in that year, or 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. Apply the relevant legal test to the facts for the tax year; a person’s residence status can have consequences beyond dividend income.
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Records to keep and common mistakes to avoid
- Keep the gross amount visible. Reporting only the net cash received can obscure the dividend amount on which tax was calculated.
- Keep the payer’s classification. It may determine whether an ordinary rate, a fund-component rate, or a specialized exception is relevant.
- Do not treat every deduction as final. Confirm the applicable provision before deciding whether withholding settles the liability or is adjustable.
- Do not equate a mutual fund’s label with its income mix. The reported rates depend on the debt- or equity-linked portion.
- Do not treat a foreign tax payment as an automatic full credit. Residence, chargeability, supporting evidence, statutory limits, and timing all matter.
- Keep dividend tax separate from gains. A distribution and profit from selling or redeeming an investment are different types of income and should not be merged into one calculation.
For Tax Year 2027, use the rates as category-specific reported figures and confirm the current FBR schedule before acting. The most reliable starting point is the gross amount and payer documentation, followed by the legal category, ATL status where relevant, and the rule governing whether the deduction is final or adjustable.
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