Tax Planning for Businesses – Minimizing Tax Liability

This article explores strategies for businesses to reduce their tax burden in Pakistan.

Key Concepts:

  • Minimum Tax: A fixed minimum tax based on a percentage of turnover (currently 1.5%).
  • Taxable Income: Profit after adjustments like business losses and depreciation.
  • Minimum Tax Credit: The difference between previously paid minimum tax and regular tax liability.

The Strategy:

  1. Calculate Taxable Income: Consider business losses, depreciation, and unabsorbed depreciation.
  2. Compare Taxable Income with Minimum Tax: The higher figure determines your tax liability.
  3. Utilize Minimum Tax Credit: If your minimum tax exceeds regular tax, the credit is carried forward for future adjustments.


  • Reduces current tax liability.
  • Optimizes tax payments across multiple years.

Planning Tips:

  • Don’t automatically claim the entire Minimum Tax Credit.
  • Consider advance taxes and other adjustments that may reduce your current liability.
  • Carry forward any unused credit for future tax optimization.


This article provides a simplified overview. Consult a tax professional for specific guidance applicable to your business situation.

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