How to Pay Foreign Contractors in Pakistan

June 14, 2021

Salary to foreign employees in India is given in the Pakistani rupee. The independent contractor payment schedule is defined by the payment terms and rights in Pakistan. The average Pakistani independent contractor salary is PKR 2,227,336 per annum and PKR 1071 per hour. Paying independent contractors hourly in Pakistan has gained immense significance because a higher lot of software developers and foreign workers work remotely from the country. They usually use the English language for dealings rather than their native language Urdu.

The paying contractor pays to the workers working remotely from Pakistan by a US company tax occurs through various remittance services operating in the country. These companies charge a particular amount for paying 1099 employees and the independent contractor pays in Pakistan. Western Union, International Wire Transfer, International Money Transfer, Remitly, Xoom, and Bank transfers are some remittance services offered to pay employee cash legally in Pakistan. Payments to overseas contractors are sent on the US exchange rates i.e. 155.56 PKR. 

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Salaries in Pakistan:

The average monthly salary in Pakistan is 81,800PKR. The average software developer salary in Pakistan is 512,775 per annum. Remittance services such as TransferWise, Remitly, Xoom, Payoneer, and IMT are available in both India and Pakistan. Many people working as independent contractors in Pakistan for US companies utilize these services. These services can also be used for getting paid by international clients.

Working and hiring foreign contractors of Pakistan:

Today, many people including software developers are working remotely from Pakistan. Hiring an independent contractor in Pakistan depends on the Provisions of Independent Contractor Agreement in Pakistan. A remote employee also provides Payments to Foreign Contractor for Services Form. An Independent contractor agreement sample contains information of contractor and client particulars, services, payment, and due date. Pakistanis can also work on US payroll if they have a US-based visa which includes bonuses, salaries, and deductions.

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Income taxes for Pakistani remote workers:

Employees working remotely from Pakistan have to file and pay income taxes of states where the employee lives. Taxes are not higher for foreign contractors because when an employee files an annual return you have to make estimated quarterly tax payments. However, paying independent contractors in cash in Pakistan is not illegal in Pakistan but it is usually done to avoid payroll and income taxes.

Following are some important remittance services currently operational in Pakistan:

Western Union

Western Union services are trustworthy and are available in over 200 states of the world. The company’s website provides opportunities for reporting a security bug and fraud awareness. The company has 150 million digital and retail customers all over the world. The company delivers contractor pays and helps in paying freelancers of Pakistan through its convenient WU app, in person at various locations, and over the phone. The payments to foreign contractors for services are received in the local currency. Price Estimator Tool of Western Union helps to calculate remittance fees. Foreign contractor salaries can be received in minutes to days through Western Union. The company charges USD 2.72 for making transactions in Pakistan.

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RIA:

Freelancers and foreign contractors are also getting their salaries from foreign companies using RIA. RIA is considered one of the largest remittance services that operate in almost 150 countries including Pakistan. RIA is easy to use and provides free transfers through banks. The contractor pays are delivered in almost 3 days with good customer service. However, the security check process of RIA is an extensive procedure. Due to this RIA is not recommended for fast transfers of Pakistan contractor pays.

Remitly:

Remitly is one of the best methods to transfer Pakistani contractor pays and paying 1099 employees because it offers instant deliveries in the recipient’s mobile wallet (Express Transfer). Remitly delivers foreign independent contractor pays over $1000 without a fee. Economy transfer service transfers contractor pays within 3-5 days. The fee for transfers below $1000 is $3.99 and a 3% remittance fee is charged on card payments.

Xoom:

Xoom by PayPal is another best remittance service that is operational in Pakistan. Xoom offers fast money transfers without a fee. The process of signing in and paying contractor salaries is convenient if compared to other remittance services. Xoom also provides free transfers over $1000 if banks are used as the sending contractor pays. Remittance charges are locked in the exchange rates. The maximum limit of sending money is $10,000. The company’s application helps to track the contractor payments and freelancer salaries. A $20 gift card is given to the referrals as well. However, complaints of delays and cancellations of the payments have also been observed.

International Money Transfer:

IMT is also an affordable option for paying employee cash legally in Pakistan. It is a secure method of paying wages to overseas employees in Pakistan. Online transfers are easily made 24/7 for transferring contractor pays swiftly and timely through IMT. Transfer can occur without a fee and at very low rates depending on the region from where freelancer payments are sent. However, a mark-up is made on the exchange rates through which they earn money. For example, a 0.4-2.5% mark-up is added if transfer rates range from $8-$50

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Wise International Payments:

Wise International Payment is another best way to send contractor pays to Pakistan. It provides high limits of $1000,000 in a single transaction and offers low costs. Bulk payment options are also available and the transactions are usually made online. Furthermore, exchange rates are real and the amount can also be received in the local currency i.e. Pakistani rupee. However, the one-time verification process can take up to several days.

Payoneer:

Salaries can be paid to employees in Pakistan using Payoneer. Funds withdrawal from payoneer can be done through Payonner card from various banks. The transactions can be made in 0-3 days from payoneer. Payoneer charges $3 as an average transfer fee. Payments can be sent through Mastercard which has a daily limit of $25,00. Also, an average of 1% is charged in foreign exchange rates by Payoneer.

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International Bank Transfer:

Foreign contractors can also be paid through bank transfers. However, a hefty fee of the banks limits their use. About $30 is charged to make a transaction and up to 5% margin is also charged at the interbank rate. This depends on the amount you are transferring. The transfer can be done quickly in 1-5 working days.