Investing from US & Canada

The United States and Canada are home to a growing and increasingly affluent Pakistani diaspora. However, investing in Pakistan from North America comes with some of the most complex tax and compliance considerations of any jurisdiction. US taxpayers, in particular, face FBAR (Foreign Bank Account Report) and FATCA requirements that mandate disclosure of foreign financial accounts, and failure to comply can result in severe penalties.

This chapter will provide a detailed guide for US and Canadian Pakistanis. We will cover the tax treatment of NPC income, PSX capital gains, and other Pakistani investment returns under the US-Pakistan and Canada-Pakistan tax treaties, including how to claim foreign tax credits to avoid double taxation. For US taxpayers, we will walk through FBAR filing (FinCEN Form 114), FATCA Form 8938, and the reporting of foreign financial accounts on Schedule B. For Canadians, we will cover the T1135 Foreign Income Verification Statement.

We will also discuss how Pakistani investments fit alongside North American retirement planning — 401(k), IRA, RRSP, and TFSA — and how to think about portfolio allocation when you are already contributing to tax-advantaged accounts in the US or Canada.