Japan – Pakistan Tax Treaty
The Japan-Pakistan tax treaty caps withholding on dividends at 10% for portfolio investors and 5% for qualifying direct investment, and interest at 10%. Royalties are taxed at a uniform 10% across all categories. Private pensions are taxable only in the country of residence, with no withholding at source. This is one of 47 active treaties in Japan's network and one of 28 in Pakistan's. The general dividend rate of 10% is below the median in both countries' treaty networks (Japan: 15%, Pakistan: 15%).
Verified data
FBR Tax Treaty Network (fbr.gov.pk) (Treaty list verified April 2026. Rates from individual treaty texts (Articles 10-12).)
Withholding Rate Summary
Source: Pakistan Treaty Reference| Income Type | Treaty Rate | Statutory Rate (Pakistan) |
|---|---|---|
| Dividends (general) Portfolio investors | 10%saves 5% | 15% |
| Dividends (qualified) Beneficial owner is a company holding >= 10% of voting stock | 5%saves 10% | 15% |
| Interest Bank interest, bonds, loans | 10%saves 5% | 15% |
| Royalties (avg) Patents, copyright, know-how, film/TV | 10% | — |
| Pensions Private pension distributions | 0% | — |
| Social Security Government social security benefits | 0% | — |
“Treaty Rate” is the maximum withholding permitted under this treaty. The actual effective rate may be lower if domestic law provides a more favorable rate independently. “Statutory Rate (Pakistan)” shows the rate that applies when no treaty benefit is claimed. Qualified dividend rate requires: Beneficial owner is a company holding >= 10% of voting stock.
Dividends
The general dividend rate of 10% applies to portfolio investors. A reduced rate of 5% is available when beneficial owner is a company holding >= 10% of voting stock. Without the treaty, the statutory withholding rate on dividends is 15%.
Source: Pakistan Treaty Reference
Interest
Interest payments (bank interest, bonds, loans) are subject to 10% withholding under this treaty, compared to the 15% statutory rate. This represents a 5% reduction from the statutory rate.
Source: Pakistan Treaty Reference
Royalties
Royalty withholding rates vary by the type of intellectual property. This treaty distinguishes 4 categories, with rates ranging from 10% to 10%.
Source: Pakistan Treaty Reference
Pensions & Social Security
Private pension distributions are taxable only in the country of residence, with no withholding at source. Government social security benefits are exempt from source-country withholding.
Source: Pakistan Treaty Reference
Comparative Context
🇯🇵Japan's Network
Among Japan's 47 active treaty partners, the 10% general dividend rate ranks 10th (median: 15%).
| Partner | Rate |
|---|---|
| Hungary | 10% |
| India | 10% |
| Netherlands | 10% |
| Pakistan (this treaty) | 10% |
| Portugal | 10% |
| Romania | 10% |
| Saudi Arabia | 10% |
🇵🇰Pakistan's Network
Among Pakistan's 28 active treaty partners, the 10% general dividend rate ranks 3rd (median: 15%).
| Partner | Rate |
|---|---|
| China | 10% |
| Spain | 10% |
| Japan (this treaty) | 10% |
| Saudi Arabia | 10% |
| United Arab Emirates | 15% |
| Austria | 15% |