Our Services include:

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• Corporate and individual tax planning including of Trusts, Cooperative Societies and NGOs.

• Compliance services including preparation of income tax and sales tax returns and Customs clearance.

• Representing clients before tax authorities and assisting in preparing appeals to the Tribunals, High Courts and Supreme Court.

• International Tax Consultancy including tax on international transactions and advising on double taxation treaties.

• Assisting with sales tax matters including registration, de-registration and assessment.

• Obtaining Advance Ruling on proposed investments or business transactions.

• Establishing gratuity funds, provident funds and other employees benefit schemes and their approval from tax authorities.

• Providing general tax advice based on current and evolving laws and rulings.

 

TAX LAW SYSTEM IN PAKISTAN

 

Federal taxes in Pakistan like most of the taxation systems in the world are classified into two broad categories, viz., direct and indirect taxes. A broad description regarding the nature of administration of these taxes is explained below:

 

Direct Taxes

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Direct taxes primarily comprise income tax. For the purpose of the charge of tax and the computation of total income, all income is classified under the following heads:

• Salaries

• Interest on Securities

• Income from Property

• Income from Business or Profession

• Capital Gains

• Income from Other Sources

 

Personal Tax

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All individuals, unregistered firms, associations of persons, etc., are liable to tax, at the rates ranging from 10 to 35 per cent.

 

Tax on Companies

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All public companies (other than banking companies) incorporated in Pakistan are assessed for tax at corporate rate of 35%. However, the effective rate is likely to differ on account of allowances and exemptions related to industry, location, exports, etc.

 

Wealth Statement u/Sec. 116

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Wealth Statement u/Sec. 116 is compulsory, where declared income is Rs. 500,000/- or more.

 

Tax u/Sec. 153(8A) (omitted)

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Now, where NTN/CNIC is not available, the excess tax @ 2% shall not be collected.

 

Inter-Corporate Dividend Tax

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Tax on the dividends received by a public company from a Pakistan company is payable at the rate of 5% and at the rate of 15% in case dividends are received by a foreign company. Inter-corporate dividends declared or distributed by power generation companies is subject to reduced rate of tax i.e. 7.5%. Other companies are taxed at the rate of 20%. Dividends paid to all non-company shareholders by the companies are subject to with holding tax of 10% which is treated as a full and final discharge of tax liability in respect of this source of income.

 

Treatment of Dividend Income

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Dividend income received as below, enjoys tax exemption, provided it does not exceed Rs. 10,000/-.

• Dividend received by non-resident from the state enterprises Mutual Fund set by the Investment Corporation of Pakistan.

• Dividends received from a Domestic Company out of income earned abroad provided it is engaged abroad exclusively in rendering technical services in accordance with an agreement approved by the Central Board of Revenue.

 

Unilateral Relief

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A person resident in Pakistan is entitled to a relief in tax on any income earned abroad, if such income has already been subjected to tax outside Pakistan. Proportionate relief is allowed on such income at an average rate of tax in Pakistan or abroad, whichever is lower.

 

PAKISTAN TAX YEAR 2020 - 2021

 

Tax Rates for Salaried Individuals

 

Division I, Part I, 1st Schedule