Understanding Tax Law in Pakistan
Pakistan’s taxation system is governed by several federal and provincial laws. The main law is the Income Tax Ordinance of 2001, which covers taxable income, resident and non-resident statuses, and allowable deductions. Other laws, like the Sales Tax Act of 1990 and various provincial tax laws, apply to service taxes, property tax for overseas Pakistani and locals, and other regional taxes. Learn how our tax consultants in Pakistan can assist you.
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Income Tax Ordinance 2001
The Income Tax Ordinance of 2001 tells us different heads of income, such as salary, property, business, capital gains, and other sources. The Act also explains that what counts as taxable income and total income. Tax statuses are determined for various types of taxpayers, such as salaried individuals, sole proprietors, associations of persons (AOPs), and companies, including single-member companies.
Some Top Taxation Regulating Laws
Here are some of the most common and primary legislations that regulate the taxation system in Pakistan.
- Income Tax Ordinance, 2001
- Sales Tax Act, 1990
- Federal Excise Act, 2005
- Customs Act, 1969
- Zakat and Ushr Ordinance, 1980
- Finance Acts (annual legislation)
- Stamp Act, 1899
- Securities and Exchange Ordinance, 1969
- The Securities and Exchange Commission of Pakistan Act, 1997
- Professional Tax Acts (in each province)
Types of Taxes in Pakistan
Pakistani taxes cover income tax, withholding tax for overseas Pakistani individuals, sales, excise, customs, and service-specific provincial taxes. Key types include income tax on individuals and companies, sales tax on goods and services, and various provincial taxes on property tax in Pakistan and services.
Corporate Tax in Pakistan
It is a tax imposed on business entities registered as companies, such as private and public limited companies, banking companies, modarabas, etc. Corporate tax in Pakistan is a percentage of the company’s earnings that must be paid as tax. In Pakistan, the tax rate for companies for 2025 is given in the table below. However, certain businesses may have different rates or exemptions.
| Type | Tax Rate |
|---|---|
|
Banking Company |
39% |
|
Public & Private Companies |
29% |
|
Small Companies |
20% |
|
Alternate Corporate Tax Sec-113C |
17% |
|
Modabra |
25% |
Property Tax in Pakistan
Property tax for overseas Pakistanis or locals in Pakistan is primarily managed at the provincial level and applies to immovable property, such as the disposal of property through sale or other modes, rental income from property, etc.
Income Tax Rate in Pakistan
Income tax rates in Pakistan may vary for each entity type, such as individuals, sole proprietors, private or public limited companies, partnership firms, and associations of persons. Each has its specific tax rates. To inquire about the most up-to-date tax rates for each type of income, you can contact us or fill out the query form.
Gain Tax in Pakistan
Capital gains tax in Pakistan is applied to profits earned from the sale of assets such as property and securities. If the asset is immovable, the rates may differ for open plot sales, constructed properties, and flats. The rates can vary depending on the holding period for both immovable property and securities. Rates are different for filers and non-filers.
Tax on Business Income in Pakistan
Businesses in Pakistan are taxed on income generated from commercial activities, including profits, dividends, and other sources under the business category.
Tax on Rental Income in Pakistan
Rental income tax in Pakistan applies when the income source is rent from a property falling under Pakistan-source income if the property is located within the country.
Tax on Foreign Remittance in Pakistan
Foreign-source income, such as remittances, is generally tax-exempt; however, the requirements may vary for residents and non-residents.
Active Taxpayer Status and Verification
Check Active Taxpayer Status Online:
The active taxpayer status of a taxpayer can be checked online by using the person’s CNIC number or NTN number from FBR’s website.
Active Taxpayer List Pakistan:
The active taxpayer list in Pakistan is present and regularly updated. This list shows all active taxpayers, which can be checked by entering credentials like CNIC or NTN number.
Finding the Right Tax Consultant in Pakistan
Tax Consultant in Pakistan – Professional Assistance by LEX
LEX offers expert tax guidance in Pakistan, ensuring accurate, compliant tax management and helping you maximize benefits.
Online Tax Consultant in Pakistan – Convenient Digital Service by LEX
Manage your tax needs remotely with LEX’s convenient online consultations, ensuring quality and compliance.
Conclusion
For individuals and businesses entities to reap the legal and financial rewards and benefits, it is necessary that they must adhere to Pakistan’s tax laws to make things easier and guarantee compliance. LEX provides professional tax consultancy in this regard. Reach out to us right now for expert assistance.
