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Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. •

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Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. •

10 Things You Need to Know About Corporate Taxes in Pakistan

Do you know the ins & outs of corporate taxes in Pakistan? Dive into the latest rates (FY 24-25) for income tax, sales tax, Super Tax, WHT, & CGT. Essential guide for businesses to ensure compliance!

Understanding the corporate tax landscape in Pakistan is crucial for any business operating in the country. The Federal Board of Revenue (FBR) governs the taxation system, which is designed to ensure compliance, generate revenue, and promote economic growth. Here are ten key aspects of corporate taxes in Pakistan for the fiscal year 2025-2026, incorporating the latest rates and details:

Corporate Taxes

1. Standard Corporate Income Tax Rate

The standard corporate tax rate in Pakistan for most businesses is 29%. However, some companies may benefit from reduced rates. For instance, small and medium-sized enterprises (SMEs) are often subject to a lower rate of 20% to encourage their growth. Banking companies face a higher rate of 39%.

2. Differentiated Rates for Various Entities

Corporate tax rates can vary based on the type and size of the company.

Small Company: 20%
Public/Private Companies (other than small): 29%
Banking Company: 39%

3. Super Tax

The concept of Super Tax was reintroduced to target high-earning individuals and companies. For the tax year 2023 onwards, new slab rates for Super Tax have been introduced.

General Companies:
- Income up to PKR 150 million: 0%
- Exceeding PKR 150 million to 200 million: 1%
- Exceeding PKR 200 million to 250 million: 2%
- Exceeding PKR 250 million to 300 million: 3%
- Exceeding PKR 300 million to 350 million: 4%
- Exceeding PKR 350 million to 400 million: 6%
- Exceeding PKR 400 million to 500 million: 8%
- Exceeding PKR 500 million: 10%
Banking Companies: A 10% Super Tax is applicable for banking companies where income exceeds PKR 300 million for Tax Year 2023 and onwards.
For specified sectors (e.g., Airlines, Automobiles, Beverages, Cement, Chemicals, Cigarette & Tobacco, Fertilizers, Iron & Steel, LNG Terminals, Oil Marketing, Oil Refining, Petroleum & Gas Exploration and Production, Pharmaceuticals, Sugar, and Textiles), a 10% Super Tax was prescribed on income exceeding PKR 300 million for Tax Year 2022.

4. Minimum Tax on Turnover

A minimum turnover tax of 1.25% is generally applicable where a company’s actual tax payable is calculated to be less than 1.25% of its turnover, with some exemptions. This ensures that companies contribute a minimum amount of tax regardless of their profitability.

5. Sales Tax and Provincial Sales Tax on Services

Sales tax in Pakistan is levied on the supply of goods and certain services. The standard sales tax rate is 18%. However, reduced rates (e.g., 5% for essential goods like food and medicine) and exemptions apply. Provincial Revenue Authorities (e.g., PRA, SRB, KPRA, BRA) levy sales tax on services, with rates varying by province (e.g., Sindh at 15%, Punjab at 16%, Khyber Pakhtunkhwa and Balochistan at 15%). Businesses collect this tax from consumers and remit it to the relevant government authority.

6. Withholding Taxes (WHT)

Withholding tax is a significant component of income tax collection, representing a large portion of the FBR’s total collection. It is an advance form of income tax deducted at the source of payment. The responsibility for collection lies with the withholding agent (person or company, making the payment). Rates vary significantly between “filers” (tax compliant) and “non-filers” (non-compliant), with non-filers facing higher deductions to encourage compliance. Examples include:

Dividends: Generally 15% for filers, higher for non-filers.
Profit on Debt: Up to 20% for filers, 40% for non-filers (for amounts up to PKR 5 million).
Payments for Goods: By company, 4% for filers, 8% for non-filers (other goods).
Payments for Services: By company, 15% for filers, 20% for non-filers (other services).
Contract Payments: Generally 7% for filers, higher for non-filers.

7. Capital Gains Tax (CGT)

Capital Gains Tax is levied on gains from the sale of securities and immovable properties.

Securities: Rates depend on the holding period. For securities held less than one year, the tax rate is 15%; for those held longer, the rate decreases, becoming 0% after six years.
Immovable Property: Rates depend on the holding period and whether the company is on the Active Taxpayers’ List (ATL). For ATL companies, the rate is 15% for properties held up to one year, decreasing with longer holding periods.

8. Tax Credits and Incentives

To promote investment and growth in specific sectors, the government offers various tax exemptions and incentives. For example, IT companies registered with the Pakistan Software Export Board (PSEB) enjoy reduced tax rates on foreign earnings until 2026. Businesses established in Special Economic Zones (SEZs) may also enjoy income tax exemptions. Venture capital companies and funds are exempt until June 30, 2025.

9. Importance of Compliance and Record Keeping

Strict compliance with FBR tax laws, deadlines, and regulations is paramount to avoid penalties, fines, and legal actions. Businesses are advised to maintain detailed financial records to accurately track income, expenses, and claim eligible deductions and credits. Utilizing professional tax experts can significantly aid in effective tax planning and ensure adherence to complex tax regulations.

10. Filing Requirements and Digitalization Efforts

Companies are required to file annual income tax returns, typically at the close of the financial year. The FBR issues a National Tax Number (NTN) to companies for income tax purposes and a Sales Tax Registration Number (STRN) for sales tax activities. The FBR is continuously working towards digitalization to streamline tax processes, which is reflected in initiatives like the online Iris portal for registration and return filing.

By staying informed about these key aspects of corporate taxation, businesses in Pakistan can better navigate their financial obligations and contribute to the nation’s economic framework.

Quratul Ain

Content Writer at TaxationPk, responsible for creating engaging and informative content on taxation in Pakistan. Dedicated to making complex tax matters accessible through well-researched and compelling articles.

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