For businesses paying independent contractors in Pakistan
Best payment methods for Pakistani contractors:
Key requirements:
Pakistan has a thriving freelance economy with over 1 million registered freelancers. If you're hiring contractors in Pakistan, you need to understand:
| Method | Cost | Speed | Best For |
|---|---|---|---|
| Wise | $3-$8 | 1-2 days | Regular payments, best exchange rates |
| PayPal | $5-$15 | Instant | Widely accepted, instant transfers |
| Payoneer | $5-$10 | 1-3 days | Popular with Pakistani freelancers |
| Bank Transfer | $15-$40 | 3-7 days | Large amounts, traditional method |
Why Wise is best for Pakistan payments:
How to set up:
One of the most important decisions when paying Pakistani contractors is which currency to use.
Pay in USD if:
Pay in PKR if:
Pro tip: Most Pakistani contractors prefer USD because it protects them from PKR devaluation. Always ask your contractor which currency they prefer before setting up payments.
When hiring contractors in Pakistan, tax obligations are straightforward: the contractor is responsible for their own taxes with the Federal Board of Revenue (FBR).
Important: As a foreign company paying a Pakistani contractor, you typically don't have tax withholding obligations in Pakistan. However, you may need to report the payment in your own country. Consult with a tax professional for your specific situation.
Problem: Traditional international wire transfers cost $15-$40 per transaction with poor exchange rates.
Solution: Use Wise or PayPal to save 60-80% on transfer fees.
Problem: You assume PKR is preferred, but contractor wants USD to avoid currency risk.
Solution: Always ask your contractor which currency they prefer before setting up payments.
Problem: Verbal agreements lead to disputes about scope, deliverables, and payment terms.
Solution: Always have a written service agreement before starting work. Kontrable provides contract templates.
Problem: Pakistan is UTC+5, which can create communication challenges with US/EU teams.
Solution: Establish clear communication windows and use async tools. Pakistani contractors are often flexible with hours.
Problem: Treating a contractor like an employee (setting hours, providing equipment, etc.) creates legal risks.
Solution: Ensure true contractor relationship: they control how work is done, use own tools, work for multiple clients.
For payments: Wise, PayPal, or Payoneer
For contractor operations:
Kontrable is built specifically for managing international contractors:
A: No. EOR (Employer of Record) is for hiring employees internationally. Pakistani contractors handle their own taxes and compliance. You just need a good payment method (Wise) and contractor management tool (Kontrable).
A: Most Pakistani contractors prefer USD because it protects them from PKR devaluation. Always ask your contractor which currency they prefer.
A: Wise offers the lowest fees ($3-$8) and best exchange rates. PayPal is also popular but has higher fees ($5-$15). Avoid traditional bank transfers ($15-$40).
A: No. As a foreign company paying a Pakistani contractor, you typically don't withhold Pakistani taxes. The contractor is responsible for their own FBR tax compliance.
A: Wise takes 1-2 business days, PayPal is instant (but contractor may need time to withdraw to bank), Payoneer takes 1-3 days, and traditional bank transfers take 3-7 days.
A: Include: scope of work, deliverables, payment terms, currency, independent contractor status, IP ownership, confidentiality, and termination terms. Kontrable provides templates.
Managing Pakistani contractors?
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