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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The tax year begins on 1 July and ends on 30 June.
Accounting Standards
The accounting standards in Pakistan are based on the International Accounting Standards Committee (IASC). While Pakistan adheres to 38 of 41 international accounting standards it does not yet apply IAS 15, IAS 29, and IAS 41 .
Accounting Regulation Bodies
PIPFA
SECP
ICAP
ICMAP
Accounting Reports
The Pakistani companies have to publish annually their own accounts, financials and audit reports.
Publication Requirements
The Pakistani companies have to publish annually their own accounts, financials and audit reports.
Professional Accountancy Bodies
ICAP , Institute of Chartered Accountants of Pakistan
ICMAP , Institute of Cost and Management Accountants of Pakistan
PIPFA , Pakistan Institute of Public Finance Accounts
Certification and Auditing
A public company, a private company which is subsidiary of  public company, and certain private companies (with capital of at least 3 million PKR) have to be audited by a chartered accountant.
You can contact an external auditor: Deloitte, KPMG, Ernst & Young, PricewaterhouseCoopers.
Accounting News
Accounting news in Pakistan
Pakistan Accounting News - Einnews

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Tax Rates

Consumption Taxes

Nature of the Tax
Sales Tax
Tax Rate
The standard rate is 16%, except for telecommunication services 19,5%.
Reduced Tax Rate
Reduced tax rates vary as follow:
- 0%: Agricultural products (including milk, eggs, fish, meat and fresh vegetables) , pharmaceuticals, educational and scientific materials, newspapers and books, exports, supplies to diplomats or diplomatic missions, imports and supplies by certain registered export-oriented sectors (which are leather and textiles goods, carpets, sports goods and surgical goods).
- 5%: Tea
- 8%: White crystalline sugar
- 10%: Franchise services except the province of Punjab (16%)
Other Consumption Taxes
Other consumption taxes are levied at the national level and the local level, which include tobacco tax, fuel tax, motor vehicle tax, transfer tax etc. A Federal Excise Duty (FED) on goods manufactured or imported into Pakistan applies to the rate of 18.5%. A luxury Tax has been introduced at 5% on certain goods, including expensive watches.

Learn more about Service Providers in Pakistan on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
34%
Capital Gains Taxation
Generally taxed at the normal corporate rate.
Main Allowable Deductions and Tax Credits
Expenses on raw-material, wages, salaries, reasonable bonuses and commissions, rents, repairs, insurance, royalty payments, interest, dividends, lease payments, certain taxes (sales, municipal, road, property and expenditure taxes and also customs duties), depreciation, expenditures for scientific research and contributions to scientific research associations and professional fees for tax services.
Other Corporate Taxes
Capital duty, Payroll tax, Real-estate tax, Stamp duty, Social security, etc.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Pakistan South Asia United States Germany
Number of Payments of Taxes per Year 47.0 30.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 560.0 311.0 175.0 207.0
Total Share of Taxes (% of Profit) 35.3 40.2 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Personal tax rate. If more than 50% of an individual’s income is derived from employment Progressive rate from 0% to 20%. For more details, visit: Central Board of Revenue
PKR 0 - 400,000 0%
PKR 400,000 - 750,000 5% of the amount exceeding PkR 400,000
PKR 750,000 - 1,500,000 PKR 17,500 + 10% of the amount exceeding PKR 750,000
PKR 1,500,000 - 2,000,000 PKR 95,000 + 15% of the amount exceeding PKR 1,500,000
PKR 2,000,000 - 2,500,000 PKR 175,000 + 17.5% of the amount exceeding PKR 2,000,000
More than PKR 2,500,000 PKR 420,000 + 20% of the amount exceeding PKR 2,500,000
Allowable Deductions and Tax Credits
Deductions and tax benefits are available for non-salaried class, but not for the salaried class. Such deductions include:
- Donations to charitable organizations are deductible up to a certain limit;
- Individual fixed deductions: PKR 50,000 for single employees, PKR 60,000 for wage-earning women and PKR 40,000 for the others;
- 50% of special deduction for people above 65 years old, with an annual income which does not exceed PKR 200,000.
There are other tax deduction allowances according to the status of each.
Special Expatriate Tax Regime
No special expatriate tax regime exists in Pakistan.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the convention signed
Withholding Taxes
Dividends: 10%, Interest: 10%/20%, Royalties: 15%.

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Sources of Fiscal Information

Tax Authorities
CBR
Other Domestic Resources
Ministry of Finance

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Learn more about Taxes and Accounting in Pakistan on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The Intellectual Property Organisation of Pakistan (IPO-Pakistan).
Regional Organizations
None
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patents Ordinance, 2000
20 years
Trademark
 
Trademarks Ordinance, 2001
10 years, renewable every 10 years.
Design
 
DIndustrial Designs.
 
Copyright
 
Copyright Ordinance, 1962
50 years WIPO Copyright Treaty
Industrial Models
 
DIndustrial Designs.
 

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Legal Framework

Independence of Justice
Judiciary is not independent in Pakistan; it is influenced by politicians, government officials and Islamic extremists.
Equal Treatment of Nationals and Foreigners
Foreign nationals cannot expect a fair trial from the country’s judicial system. 
The Language of Justice
Urdu and English are the two judicial languages of Pakistan.
Recourse to an Interpreter
Possible
Sources of the Law and Legal Similarities
The main source of the law in the country is the constitution of 1973 which has been suspended and restored with amendments many times. The country's legal system is based on English common law with provisions to accommodate Pakistan's status as an Islamic state. Pakistan accepts compulsory ICJ jurisdiction but with reservations.
Checking National Laws Online
Lexadin, the world law guide
Pakistan Law Site

Learn more about Lawyers and Legal in Pakistan on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
Pakistan Standard & Quality Control Authority, Pakistan Standards and Quality Control Authority.
Integration in the International Standards Network
The PSQCA is a member of:
- International Standards Organization (ISO)
- International Electrotechnical Commission (IEC)
- International Organization of Legal Metrology (OIML)
Classification of Standards
The Pakistan Standards are the PS.
Online Consultation of Standards
Visit the site of Pakistan Standards and Quality Control Authority (PSQCA).
Certification Organizations
PCSIR Pakistan Council of Scientific and Industrial Research
PNAC Pakistan National Accreditation Council

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Business Practices

General Information
Kwintessential, Pakistani culture and customs
Opening Hours and Days

Private offices: 9h to 17h30 (Monday to Friday).
Government offices: 8h to 15h (Monday to Thursday), 8h to 12h30 (Friday) – close early due to Friday prayers, 8h to 14h (Saturday).

The private banks in Pakistan work for six days a week, with shorter working hours on Fridays and Saturdays.

 

Public Holidays

Ashoura 19 Jan
Eid-e-Milad-un-Nabi (Birth of the Prophet) 20 March
Pakistan Day 23 March
Independence Day 14 Aug
Eid al-Fitr (End of Ramadan) 2 Oct (Varies every year).
Allama Muhammad Iqbal Day 9 Nov
Eid ul-Azha (Feast of the Sacrifice) 9 Dec (Varies every year).
Quaid-e-Azam's Birthday 25 Dec
 
 

Periods When Companies Usually Close

Eid al-Fitr (End of Ramadan)

Eid ul-Azha (Feast of the Sacrifice)

Note: Muslim festivals are timed according to local sightings of various phases of the moon and the dates may change accordingly. 

These two festivals may last from two to four days, depending on the region. Most of the offices (both public and private) are closed during this period.
 

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Last Updates: October 2014