Pakistan and the USA have an active income tax treaty. Under it, Pakistani residents pay 0% US tax on most freelance income, royalties (KDP, App Store), and business profits from US clients. Default rate without claiming the treaty: 30%. Claim it by submitting Form W-8BEN to every US platform. For filing US tax returns to recover withheld taxes, you need an ITIN ($99).
The United States-Pakistan Income Tax Treaty is a bilateral agreement between both governments that determines which country has the right to tax specific types of income. Its purpose is to prevent the same income from being taxed twice — once in Pakistan and once in the USA.
For Pakistani freelancers, authors, app developers, and entrepreneurs earning from US sources, this treaty is extremely valuable — it means most of your US income is taxed only in Pakistan (at Pakistan's rates), not in the US at all.
Per the IRS official withholding rate table, the Pakistan-US treaty sets 0% withholding on royalties (copyright, literary, scientific, artistic) for Pakistani residents. This directly benefits KDP authors, app developers, and creators earning royalties from US platforms.
| Income Type | Default US Rate | Pakistan Treaty Rate | Savings |
|---|---|---|---|
| Freelance / Personal Services | 30% | 0% | 30% saved |
| Royalties (KDP, App Store, Copyright) | 30% | 0% | 30% saved |
| Business Profits | 30% | 0% | 30% saved |
| Dividends (US company) | 30% | 15% | 15% saved |
| Interest | 30% | 0–15% | Varies |
Select "Not a US person" → Country: Pakistan → Enter NTN or ITIN as Foreign TIN → Claim treaty benefit. Withholding drops to 0% immediately.
Same process. Select Pakistan. Enter NTN or ITIN. Fiverr confirms 0% withholding under the treaty. Future payments arrive in full.
During KDP setup: Tax Interview → Non-US person → Pakistan → Claim royalty treaty → 0% rate applies. Any previously withheld tax (30%) can be recovered via Form 1040-NR with ITIN.
Google Payments → Settings → Payments profile → Tax info → W-8BEN → Pakistan → Claim treaty. Google applies the treaty to eligible AdSense revenue from US viewers.
Both platforms require W-8BEN tax setup for non-US developers. Pakistan treaty gives 0% on royalty income from app sales.
For W-8BEN submission on most platforms, your Pakistani NTN is accepted as a Foreign TIN — no ITIN required. However, an ITIN is required when:
→ You file Form 1040-NR to recover previously withheld US taxes (NTN not accepted by IRS)
→ You own a US LLC and must file Form 5472 annually
→ You want to open a US bank account or build US credit history
If KDP, Upwork, or YouTube withheld 30% before you knew about the treaty, file Form 1040-NR to get it back. ITIN required. ITIN Plus processes it for $99 — lowest price in Pakistan.
Apply for ITIN — $99 →✅ IRS.gov Listed · 📞 +1 (305) 216-6992
Yes. The treaty covers "business profits" and "personal service income" — both apply to freelance work on Upwork and Fiverr. Submitting W-8BEN with Pakistan as your country of residence and NTN as Foreign TIN activates the 0% rate.
Yes. The treaty eliminates US tax — not Pakistan tax. You still owe Pakistani income tax on your earnings per FBR rules. PSEB-registered freelancers with foreign remittances pay 0.25% flat (guaranteed until June 2029).
The IRS allows amended returns for up to 3 prior tax years. If you had 30% withheld in 2023, 2024, or 2025, you can potentially recover it by filing amended 1040-NR returns. You need an ITIN and a tax professional to do this.