Pakistan

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Business Environment

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.

Accounting Rules

Tax year: The fiscal year begins on January 1st and ends on December 31st of the same year.
Accounting standards: The accounting standards in Pakistan are based on: "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: Institute of Chartered Accountants of Pakistan
Institute of Cost and Management Accountants of Pakistan
Pakistan Institute of Public Finance Accounts
Securities and Exchange Commission of Pakistan (SEC)
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: Institute of Chartered Accountants of Pakistan
Institute of Cost and Management Accountants of Pakistan
Pakistan Institute of Public Finance Accounts
Certification and auditing: Institute of Chartered Accountants of Pakistan

Institute of Cost and Management Accountants of Pakistan
Pakistan Institute of Public Finance Accounts
Accounting news: Accounting news in Pakistan
Pakistan Accounting News on einnews.com

Tax Rates

Consumption taxes

Nature of the tax: Sales Tax
Tax rate: The standard rate is 16%. However, there are some items which are chargeable to sales tax at 18.5% or 21% of value of supplies.
Reduced tax rate: Reduced tax rates vary between 0% and 12.5%.
Other consumption taxes: Other consumption taxes are levied at the national level and the local level, which include land tobacco tax, fuel tax, motor vehicle tax, etc.

Corporate taxes

Company tax: 35%
Capital gains taxation: Taxed at the normal corporate rate.
Main allowable deductions and tax credit: 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.

Individual taxes

Tax rate

Personal tax rate	Progressive rate from 0% to 20%. For more details, visit: Central Board of Revenue
PKR 0 - 180,000	0%
PKR 180,000 - 250,000	0.5%
PKR 250,000 - 350,000	0.75%
PKR 350,000 - 400,000	1.5%
PKR 400,000 - 450,000	2.5%
PKR 450,000 - 550,000	3.5%
PKR 550,000 - 650,000	4.5%
PKR 650,000 - 750,000	6%
PKR 750,000 - 900,000	7.5%
PKR 900,000 - 1,050,000	9%
PKR 1,050,000 - 1,200,000	10%
PKR 1,200,000 - 1,450,000	11%
PKR 1,450,000 - 1,700,000	12.5%
PKR 1,700,000 - 1,950,000	14%
PKR 1,950,000 - 2,250,000	15%
PKR 2,250,000 - 2,850,000	16%
PKR 2,850,000 - 3,550,000	17.5%
PKR 3,550,000 - 4,550,000	18.5%
PKR 4,550,000 - 8,650,000	19%
More than PKR 8,650,000	20%

Allowable deductions and tax credit: 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: 50, 000 PKR for single employees, 60 000 PKR for wage-earning women and 40 000 PKR for the others.
50% of special deduction for people above 65 years old, with an annual income which does not exceed 200, 000 PKR.
There are other tax deduction allowances according to the status of each.
Special expatriate tax regime: No special expatriate tax regime exists in Pakistan.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: See the list of the convention signed
Whithholding taxes: Dividends:7.5%/10%, Interest: 10%, Royalties: 15%/30%

Sources of fiscal information

Tax Authorities: Federal Board of Revenue
Other domestic resources: Ministry of Finance, Pakistan

Intellectual Property

National organizations: 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.	Trademark law treaty Nice agreement Protocol relating to the Madrid Agreement
Design Designs Ordinance, 2000	10 years, renewable after every 10 years.
Copyright Copyright Ordinance, 1962	50 years
Industrial Models Registered Layout – Designs of Integrated Circuits Ordinance, 2000	10 years

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
LawSite.com.pk

Standards

National standards organizations: Pakistan Standards and Quality Control Authority (PSQCA)
Integration in the international standards network: The PSQCA is a member of:
- International Standard organization (ISO)
- International Electro-technical Commission (IEC)
- International Organization of Legal Metrology (OIML)
Classification of standards: PS [Mark of Quality]
Online consultation of standards: Visit the site of Pakistan Standards and Quality Control Authority (PSQCA)
Certification organizations: Pakistan Council of Scientific and Industrial Research (PCSIR)
Pakistan National Accreditation Council (PNAC)

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