|Research by Country/Region
January 22, 2018
|PAKISTAN: CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS |
A. Is this country a member of the Information Technology Agreement?
B. Customs documentation requirements for IT products
C. Software: duties and taxes, updates, licenses, electronically delivered
D. IT services: tax treatment and other regulations
E. Refurbished, used, or repaired computer equipment imports
A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.
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B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS
What are the documentation requirements for the physical import of software? For other information technology products?
Following are the documentation requirements for importing software and other IT products into Pakistan:
--Letter of Credit (L/C)
--National Tax Number of Pakistani importing entity
--Catalog/brochure with complete details of the software
--Certificate of Authorization to Use from software developer
Note: The importer must first obtain a certificate from the Pakistan Software Export Board stating that the software being imported is not manufactured locally. Next, the importers commercial Bank must seek State Bank of Pakistan's approval for the L/C and contract.
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED
DUTIES AND TAXES ON SOFTWARE IMPORTS
Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
According to the Government of Pakistan's Central Bureau of Revenue (CBR), duties apply only to the software's intellectual property, and not to its medium.
Are taxes assessed on the intellectual property of the software or on the medium on which is it presented?
According to the CBR, taxes apply only to the software's intellectual property, and not to its medium.
The CBR imposes a 6% advance income tax (a withholding tax) on software imports. Software is exempt from all other duties and taxes, including Pakistan's General Sales Tax (a value-added tax).
The 6% tax is applicable to software on CD ROMs, software on magnetic tapes and diskettes, recorded media for reproducing representations of instructions, data, sound and image recorded in a machine readable binary form and capable of being manipulated or providing interactivity to a user by means of an automatic data processing machine.
Software programmed into a microprocessor and dedicated Operating System software are treated as part of the built-in system/equipment. There are no duties and taxes on built-in software since computer hardware is also exempt from duty and taxes.
Is customized software treated differently than packaged software?
The Government of Pakistan does not differentiate between customized software and packaged software.
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IMPORTS OF SOFTWARE UPDATES
What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
Software updates are treated the same as original sales of software. If the update is shipped separately, a 6% advance income tax (withholding tax) is applied to the invoice price (see above).
If the cost of updates is included in the original commercial invoice but is shipped subsequently, a 6% advance income tax is applicable twice: first, at the time of presenting the original invoice; and again when the software is actually shipped.
Should the update shipment lack an invoice (in case the importer had already paid the 6% tax on the earlier original invoice), CBR uses fair market value to assess the 6% tax on the separate software shipment.
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SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER
Are software licenses classified in Harmonized System 4907? Are import duties/taxes applied? If so, on what cost/price base are they levied?
In Pakistan, software licenses are not classified in the Harmonized System 4907 category. Therefore, no duties or taxes are applied to the software license portion of the software.
Are withholding or other additional taxes applied on software licenses? If yes, how?
There are no taxes or duties on transactions involving just the license fee (example: when the importer seeks to increase the number of authorized users and retain the same software). The importer, however, must get approval from Pakistan's central bank, the State Bank of Pakistan, via his/her commercial bank, to remit the license fee to the U.S. software vendor.
If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
Intellectual property laws relating to copyrights and license agreements do make software licensing agreements binding on Pakistani consumers. Implementing regulations, which amplify laws and detail enforcement protocols, however, are not fully developed for IPR legislation. Retail consumers generally ignore U.S. license agreements.
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SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE
Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
The Government of Pakistan does not tax software delivered electronically or via the Internet. We are unaware that the Government of Pakistan monitors such transactions.
Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
None. The Government of Pakistan does not monitor or tax imports of digitized products over the Internet or other networks.
Must an electronically delivered software import be accompanied by a physical shipment of the same product?
The Government of Pakistan does not monitor or tax software delivered electronically or via the Internet.
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D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS
Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
Yes. A 15% General Sales Tax (GST) is applicable on services (training, set-up, etc.) relating to the sale of software at the point of service. The tax is based on the invoice value of the service provided.
Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
Yes. IT solution providers are permitted to enter Pakistan to set-up hardware/software related systems and offer training.
Are special visa, work permits, and/or professional certification by an accredited body required?
A visa/work permit is required. For further information on visas, please visit the website of the Embassy of Pakistan at http://www.pakistan-embassy.com
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E. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS
1. REFURBISHED COMPUTER EQUIPMENT
Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?
The Government of Pakistan permits import of old/used/refurbished computer hardware less than five years old (date of manufacture to date of import). However, old and used parts for computer hardware are allowed only on a case-by-case basis. A specific used hardware parts and accessories list must be submitted to CBR in advance so they can determine whether the import is permissible.
If so, what are the documentation requirements?
Documentation requirements are identical to those for any imported IT products, as listed above.
Is special labeling required?
Labels must declare that the hardware is used.
What value should be shown on the invoice?
The actual purchase price of the equipment must be shown on the invoice.
How are duties and taxes assessed?
Such imports are exempt from duties and taxes.
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2. USED COMPUTER EQUIPMENT
Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
Answers are the same as for refurbished equipment. See above.
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3. REPAIRED COMPUTER EQUIPMENT
Are duties and taxes assessed on the re-import of repaired computer equipment?
Answers are the same as for refurbished and used equipment. See above.
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This response was prepared by the U.S. Department of State/Economic Section in Islamabad in February 2003. For further clarification please contact:
Ravi S. Candadai
Deputy, Economic Section
U.S. Embassy Islamabad
Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.
This page was last updated on 07/14/2009. This site is operated by the Office of Technology and Electronic Commerce (OTEC) division of the International Trade Administration, U.S. Department of Commerce.