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Retained

  • Statutory Tax Rate 29
  • Surtax Based on Taxable Income 0
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 29

Statutory Tax Rate

The standard corporate tax rate is 29%.

For banking companies, the standard corporate tax rate is 39% (increased from 35% effective 1 July 2022). Tax is levied at increased rates ranging from 39% to 55% (increased from 35% to 40% effective from 1 July 2022) on the taxable income of banks attributable to investment in Federal Government securities.

For small companies meeting certain conditions, the tax rate is 20% (reduced from 21% effective 1 July 2022).

In addition, a super tax applies at a rate of 4% for banking companies and, effective from 1 July 2021, at the following progressive rates for other companies:

Income

Tax Rate

Income not exceeding PKR 150 million

0%

Income exceeding PKR 150 million up to 200 million

1%

Income exceeding PKR 200 million up to 250 million

2%

Income exceeding PKR 250 million up to 300 million

3%

Income exceeding PKR 300 million

4%

 

The super tax applies at a higher rate of 10% (instead of 4%) for companies engaged in specified industries where income exceeds PKR 300 million, including banking companies (effective from 1 July 2022), the business of airlines, automobiles, beverages, cement, chemicals, cigarettes and tobacco, fertilizer, iron and steel, LNG terminal, oil marketing, oil refining, petroleum and gas exploration and production, pharmaceuticals, sugar, and textiles.

The minimum tax is payable at 1.25% of turnover. An alternate corporate tax (ACT) also applies, whereby the minimum tax liability of the company is determined as the higher of 17% on accounting income or the corporate tax liability including the minimum tax on turnover.

 

 

Capital Gains

  • Statutory Tax Rate 29
  • Surtax Based on Taxable Income 0
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 29

Statutory Tax Rate

Capital gains from the sale of capital assets (including unlisted securities) are taxed at the standard corporate tax rate i.e., 29% (earlier if such assets or shares were held for more than 12 months, only 75% of the gains were subject to tax).

Capital gains from the sale of listed securities purchased on or after 1 July 2022 are taxed at the following rates depending on the holding period:  

 

Holding Period

Tax Rate

Not exceeding one year

15%

Exceeding one year but not exceeding two years

12.5%

Exceeding two years but not exceeding three years

10%

Exceeding three years but not exceeding four years

7.5%

Exceeding four years but not exceeding five years

5%

Exceeding five years but not exceeding six years

2.5%

Exceeding six years

0%

For securities purchased on or before 30 June 2022, the rate is 12.5% irrespective of the holding period.