Country Trading Profiles Pakistan - Taxes

Tax Rates

Nature of the tax: Sales Tax
Tax rate: The standard rate is 17%. However, there are some items which are chargeable to sales tax at 18.5% or 21% of value of supplies.
Reduced tax rate: Reduced tax rates vary between 0% and 12.5%.
Other consumption taxes: Other consumption taxes are levied at the national level and the local level, which include tobacco tax, fuel tax, motor vehicle tax, transfer tax etc.

Corporate tax rate	35%
Corporate tax for small companies	20% to 35%

Capital gains taxation: Taxed at the normal corporate rate.
Main allowable deductions and tax credit: Expenses on raw-material, wages, salaries, reasonable bonuses and commissions, rents, repairs, insurance, royalty payments, interest, dividends, lease payments, certain taxes (sales, municipal, road, property and expenditure taxes and also customs duties), depreciation, expenditures for scientific research and contributions to scientific research associations and professional fees for tax services.
Other corporate taxes: Capital duty, Payroll tax, Real-estate tax, Stamp duty, Social security, etc.

Personal tax rate	Progressive rate from 0% to 20%. For more details, visit: Central Board of Revenue
PKR 0 - 180,000	0%
PKR 180,000 - 250,000	0.5%
PKR 250,000 - 350,000	0.75%
PKR 350,000 - 400,000	1.5%
PKR 400,000 - 450,000	2.5%
PKR 450,000 - 550,000	3.5%
PKR 550,000 - 650,000	4.5%
PKR 650,000 - 750,000	6%
PKR 750,000 - 900,000	7.5%
PKR 900,000 - 1,050,000	9%
PKR 1,050,000 - 1,200,000	10%
PKR 1,200,000 - 1,450,000	11%
PKR 1,450,000 - 1,700,000	12.5%
PKR 1,700,000 - 1,950,000	14%
PKR 1,950,000 - 2,250,000	15%
PKR 2,250,000 - 2,850,000	16%
PKR 2,850,000 - 3,550,000	17.5%
PKR 3,550,000 - 4,550,000	18.5%
PKR 4,550,000 - 8,650,000	19%
More than PKR 8,650,000	20%

Allowable deductions and tax credit: Deductions and tax benefits are available for non-salaried class, but not for the salaried class. Such deductions include:
- Donations to charitable organizations are deductible up to a certain limit;
- Individual fixed deductions: PKR 50,000 for single employees, PKR 60,000 for wage-earning women and PKR 40,000 for the others;
- 50% of special deduction for people above 65 years old, with an annual income which does not exceed PKR 200,000.
There are other tax deduction allowances according to the status of each.
Special expatriate tax regime: No special expatriate tax regime exists in Pakistan.

Countries with whom a double taxation treaty have been signed: See the list of the convention signed
Withholding taxes: Dividends: 7.5%/10%, Interest: 10%/30%, Royalties: 15%.
Bilateral agreement

Tax year: The fiscal year begins on January 1st and ends on December 31st of the same year.
Accounting standards: The accounting standards in Pakistan are based on the International Accounting Standards Committee (IASC). While Pakistan adheres to 38 of 41 international accounting standards it does not yet apply IAS 15, IAS 29, and IAS 41 .
Accounting regulation bodies: PIPFA
SECP
ICAP
ICMAP
Accounting reports: The Pakistani companies have to publish annually their own accounts, financials and audit reports.
Publication requirements: The Pakistani companies have to publish annually their own accounts, financials and audit reports.
Professional accountancy bodies: ICAP
ICMAP
PIPFA
Certification and auditing: A public company, a private company which is subsidiary of public company, and certain private companies (with capital of at least 3 million PKR) have to be audited by a chartered accountant.
You can contact an external auditor: Deloitte, KPMG, Ernst & Young, PricewaterhouseCoopers.
Accounting news: Accounting news in Pakistan
Pakistan Accounting News - Einnews