Tax Guide Pakistan

Financial Year – 1 July – 30 June
Currency – Pakistani Rupee (PKR)

Corporate Tax Summary

Residence – A company is resident in Pakistan for a tax year if it meets one of the following criteria.

  1. It is incorporated or formed by or under Pakistani law,
  2. its control and management situated wholly in Pakistan at any time during the year, or
  3. it is a Provincial Government or Local Government in Pakistan.

Basis of Taxation – Resident companies are taxed on their worldwide income, while non-resident companies are taxed only on their Pakistan-source income. A foreign company operating through a branch in Pakistan is taxed on the Pakistan-source income attributable to that branch, at the applicable corporate tax rates.

Reference
Corporate Income Tax Rate (%) 29% Corporate Tax Rates for the Tax Year 2026

  • Public Company 29%
  • Banking Company 43%
  • Small Company 20%

For tax year 2027 the rate for banking companies would be 42%

Minimum Tax on Turnover
Where the tax payable by a company or a PE of non resident is less than 1.25% of the turnover, the company is required to pay a minimum tax equivalent to 1.25% of the turnover. In certain cases/sectors, such turnover tax is payable at rates less than 1.25% (ranging from 0.25% to 0.75 % of turnover).

Alternative Corporate Tax
Where the normal tax payable & minimum tax payable by a company is less than 17% of accounting profit, the company is required to pay a minimum tax equivalent to 17% of accounting profit.
Withholding Tax Rate:
Dividends 15% General Rules:

  • For Non-Residents: The rate is 20%, or a lower rate under an applicable Double Taxation Treaty (DTT).
  • For Residents: Rate depends on Active Taxpayer Status (ATL), 15% if appearing on the ATL otherwise 30%.

Special Sector Rates & Cases:

  • Power Generation Sector: 7.5% for both residents and non-residents (subject to conditions).
  • Real Estate Investment Trust (REIT): 15% for dividends from a REIT (in cases not covered below).
  • Mutual Funds: Rate depends on the fund’s underlying assets:
    • 25% on the proportion of income derived from debt securities.
    • 15% on the proportion of income derived from equities.
    • Note: If the dividend recipient is a corporate entity, the debt securities component is taxed at 29%.
  • Special Purpose Vehicle (SPV):
    • 0% if received by a REIT scheme from its SPV (as defined under REIT Regulations, 2015).
    • 35% if received by any other person from an SPV.
  • Dividends from Tax-Exempt/Loss-Making Companies: 25% if received from a company that pays no tax due to income exemption, carried forward losses, or claimed tax credits.
Interest 15% For Non-Residents:

  • 20% for all non-resident persons

For Residents:

The applicable rates are:

  • 20% on interest earned from bank or financial institution deposits.
  • 20% on interest earned from Government securities (for recipients other than individuals).
  • 15% on interest earned from all other debt instruments.

The above rules apply to both corporate entities and individuals if they are ATL taxpayers. In the case of non-ATL taxpayers, the rate would be double.
Royalties from Intellectual Property 15% Tax at the rate of 15% is charged on royalty income or fee for technical services for non-residents
Carry Forward (Losses) 6 Years Losses under the head “Income from Business” can be carried forward for a maximum of six years.
Exception:

  • Resident Hotel Companies: Losses incurred from the tax year starting July 2020 onwards can be carried forward for 8 years.

Individual Tax Summary

Residence – A person is resident in Pakistan for income tax purposes if any of the following apply:

  • Is present in Pakistan for 183 days or more in aggregate during the tax year
  • Is an employee or official of the Federal or a Provincial Government posted abroad during the tax year
  • Is a citizen of Pakistan who either:
  • Was not present in any other country for more than 182 days during the tax year
  • Was not a resident taxpayer in any other country during the tax year

Basis of Taxation – Pakistan levies tax on its residents on their worldwide income. A non-resident individual is taxed only on Pakistan source income, including income received or deemed to be received in Pakistan, or deemed to accrue or arise in Pakistan.

Filing Status – Self Assessment System – Individuals are required to file their own returns through the online portal.

Personal Income Tax Rates (Salaried)

Taxable Income (PKR) Tax Payable
Where taxable income does not exceed Rs. 600,000/- 0%
Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000/- 1% of the amount exceeding Rs. 600,000/-
Where taxable income exceeds Rs. 1,200,000/- but does not exceed Rs. 2,200,000/- Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000/-
Where taxable income exceeds Rs. 2,200,000/- but does not exceed Rs. 3,200,000/- Rs. 116,000 + 23% of the amount exceeding Rs. 2,200,000/-
Where taxable income exceeds Rs. 3,200,000/- but does not exceed Rs. 4,100,000/- Rs. 346,000 + 30% of the amount exceeding Rs. 3,200,000/-
Where taxable income exceeds Rs. 4,100,000/- Rs. 616,000/- + 35% of the amount exceeding Rs. 4,100,000/-

Personal Income Tax Rates (Non-Salaried)

Taxable Income (PKR) Tax Payable
Where taxable income does not exceed Rs. 600,000/- 0%
Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000/- 15% of the amount exceeding Rs. 600,000
Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,600,000 Rs. 90,000 + 20% of the amount exceeding Rs. 1,200,000
Where taxable income exceeds Rs. 1,600,000 but does not exceed Rs. 3,200,000 Rs. 170,000 + 30% of the amount exceeding Rs. 1,600,000
Where taxable income exceeds Rs. 3,200,000 but does not exceed Rs. 5,600,000 Rs. 650,000 + 40% of the amount exceeding Rs. 3,200,000
Where taxable income exceeds Rs. 5,600,000 Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000

Note: A surcharge is applicable to individuals with a total taxable income exceeding PKR 10 million. For non-salaried individuals, the surcharge is levied at 10% of their tax liability, while for salaried individuals, the rate is 9% of their tax liability.

Tax Rates on Pension

Taxable Income (PKR) Tax Payable
Where taxable income does not exceed Rs. 600,000/- 0%
Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000/- 1% of the amount exceeding Rs. 600,000/-
Where taxable income exceeds Rs. 1,200,000/- but does not exceed Rs. 2,200,000/- Rs. 6,000 + 11% of the amount exceeding Rs. 1,200,000/-
Where taxable income exceeds Rs. 2,200,000/- but does not exceed Rs. 3,200,000/- Rs. 116,000 + 23% of the amount exceeding Rs. 2,200,000/-
Where taxable income exceeds Rs. 3,200,000/- but does not exceed Rs. 4,100,000/- Rs. 346,000 + 30% of the amount exceeding Rs. 3,200,000/-
Where taxable income exceeds Rs. 4,100,000/- Rs. 616,000/- + 35% of the amount exceeding Rs. 4,100,000/-

Personal Income Tax Rates (Non-Salaried)

Description Tax Rate
Where the amount of pension received does not exceed rupees ten million 0% of the amount
Where the amount of pension received exceeds rupees ten million 5% of the amount exceeding rupees ten million

General Sales Tax on supplies and imports (GST)

Rate 18%
Taxable Transactions The standard rate of sales tax on goods is 18%. However, this may vary (up, down or zero) in specific cases. Certain goods are exempt from sales tax.

Additionally, Sales tax on services is levied and administered separately by each province. The standard rate of tax is 15% except province of Punjab where the standard is 16%. The rates vary depending on the province and services.
Registration Every person engaged in making taxable supplies in Pakistan, including zero-rated supplies, in the course or furtherance of any taxable activity carried on by him, if not already registered, is required to be registered.
Filing and Payment Every registered person must pay the sales tax for a month by the 15th of the following month (with variations for specific sectors) and file a complete and correct monthly sales tax return through the IRIS portal within three days of payment.

Other Taxes Payable

Tax Reference
Federal Excise Duty It is a federal tax imposed on the local production, sale, or import of specific goods and services within Pakistan. It is administered by the Federal Board of Revenue (FBR) and is typically passed on to the end consumer.
Stamp Duty Stamp duty is a provincial levy, which is payable on every instrument executed, drawn or presented in Pakistan as listed in the Schedule at the rates given against each item. 
Capital Value Tax Capital Value Tax (CVT) is a tax levied on the assessed value of certain high-value assets, including properties and vehicles, primarily in Pakistan.
Customs Duty It is a federal levy imposed on the import of goods. Rates are based on the Pakistan Customs Tariff and vary according to the classification of goods under the Harmonized System (HS) Code.
Professional Tax Professional tax is a provincial levy imposed on individuals and entities engaged in professions, trades, or employment.

Last update: 20.03.2026

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