A further FBR circular on foreign nationality is being circulated among tax professionals this week.
The questions were quick. Is FBR now checking every dual national? Will overseas Pakistanis be targeted? Does this affect how foreign income is taxed?
The answers go beyond the speculation. Here’s what the circular covers, who it applies to, and what dual nationals and overseas Pakistanis have to do with their own tax position that they may not be aware of.
Understanding FBR Notification No. I 3 2026 IR III
The latest instruction, circulated as FBR Notification No. I 3 2026 IR III, applies to FBR officers and not taxpayers.
It comes as part of a process which has been running all year.
Where it comes from
In June 2026, the Establishment Division notified the Civil Servants (Disclosure and Regulation of Foreign Nationality) Rules, 2026 via S.R.O. 893(I)/2026.
These rules require civil servants to declare any foreign nationality.
FBR applied them to officers of the Inland Revenue Service and Pakistan Customs Service, including ex-cadre.
What officers must declare
- Any foreign nationality, for themselves and their dependents
- Any foreign passports or travel documents
- Any marriage to a foreign national
How it is submitted
- Officers in BS-17 and above report to FBR’s Management Wing.
- Staff in BS-1 to BS-16 report through their field offices.
- Headquarters staff report to the relevant management sections.
Why the follow-up circulars
FBR has issued several reminders and deadlines this year.
A recent circular warned that officers who failed to submit declarations by October 9 would face disciplinary proceedings.
It is reported that FBR has decided to take action against officials who have not complied.
What’s happened so far
In September, reports said 16 senior FBR officers in grades BS-17 to BS-21 retained foreign nationality or permanent residence abroad.
Ten were from the Inland Revenue Service and 6 from Customs.
It is also reported that mere disclosure does not mean there has been misconduct.
So the FBR Foreign Nationality Circular 2026 is an integrity and service-rules exercise for tax officers. It comes alongside the drive to clean up FBR, which the Prime Minister has asked for this month.
What the Circular Does Not Do
Let’s be clear for our clients.
It does not ask ordinary taxpayers to declare their nationality.
It does not create a new tax on dual nationals.
It does not change how foreign income is taxed.
If you are a dual national or an overseas Pakistani, then this FBR’s latest circular this week is not aimed at you.
But your own tax position may still be worth consideration. Here’s why.
The Impact on Dual Citizens and Overseas Tax Rules in Pakistan
Dual citizenship tax rules in Pakistan are residence-based, not passport-based.
Nationality does not determine your tax status
- Holding a second passport does not make you non-resident.
- Holding only a Pakistani passport does not make you resident.
What matters is where you actually live and for how long.
When you are a resident
Under Section 82 of the Income Tax Ordinance, an individual is generally resident for a tax year if they:
- Are in Pakistan for 183 days or more in the tax year, or
- Are in Pakistan for 120 days or more in the year and 365 days or more over the previous four years, or
- Are a federal or provincial government employee posted abroad.
What residents must declare
- Pakistan-source income, such as salary, business, rent and profit
- Foreign-source income, such as salary abroad, foreign rent and foreign investments
- Foreign assets in the wealth statement, including overseas property and bank accounts
What non-residents must declare
- Generally, only Pakistan-source income, such as rent from property here, profit on Pakistani bank accounts and capital gains on Pakistani assets
Non-residents who still own property or investments in Pakistan often need to file to stay on the Active Taxpayer List and avoid non-filer rates.
Overseas Pakistanis with property here
- Property purchases and sales in Pakistan carry withholding tax.
- Non-filer rates are much higher.
- Filing keeps you on the ATL and protects you from those higher rates.
Why This Signals a More Documented Economy
The officer disclosures are about integrity within FBR, but it fits a trend of transparency which does affect taxpayers.
Information exchange with other countries
Pakistan participates in the international Common Reporting Standard.
Under it, banks in many countries report accounts held by Pakistani tax residents.
This gives FBR information about foreign bank accounts which it would not have known before.
Domestic data matching
FBR already matches returns with bank, property, vehicle and travel data. Its National Faceless Centre picks up audit situations where a person’s lifestyle does not match his claimed income.
Frequent foreign travel is one of the risk factors it looks at.
What this means for dual nationals who are residents
- A foreign bank account or property left out of your wealth statement is a risk.
- Foreign income left out of your return can be picked up via international data.
- Unexplained assets can be taxed under Section 111.
The direction is clear. Whether you’re a tax officer or a taxpayer, undisclosed foreign connections are becoming harder to hide.
What Dual Nationals and Overseas Pakistanis Should Do
Work out your residency first
- Count your days in Pakistan for the tax year (July to June).
- Check the 183-day and 120-day tests.
- Keep passport stamps and travel records.
If you’re resident
- Declare worldwide income.
- Your wealth declaration must declare offshore assets and bank accounts.
- Get tax credit for any that were legally paid abroad.
If you’re non-resident
- Declare your Pakistan-source income.
- Ensure that your wealth statement is correct for the assets held in Pakistan.
- File on time to stay on the ATL.
Don’t miss the deadline.
The Tax Year 2026 filing deadline has been extended to October 31, 2026.
Late filers now pay a Rs 25,000 ATL surcharge to get back on the list.
Let TaxAccountant.pk Manage Your Global Tax Compliance
Living between two countries may make tax more complicated, but it doesn’t have to be stressful.
At TaxAccountant.pk, we support overseas Pakistanis and dual nationals with:
- Working out their residency status
- Registering for an NTN and filing returns online, from anywhere
- Declaring foreign income and assets
- Keeping property owners in Pakistan on the ATL
- Replying to FBR notices on foreign accounts or travel
Get your position clear by October 31. Message us today.
