Pakistan imposes 45% corporate tax on banks

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ISLAMABAD: Pakistan reduced corporate tax to 45% for banks from 35%.

The country presented its federal budget on June 10, 2022 and introduced tax measures to boost revenue collection.

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Through the Finance Bill 2022, it has been proposed to increase the corporate banking tax rate to 45% from the current 35%.

In this regard, the Bill proposed to amend Section II, Part I of the First Schedule to the Income Tax Order 2001.

Proposed corporate tax rates

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The tax rate imposed on the taxable income of a company is as shown in the following table, namely:-

type of company Tax rate
Small business 20%
Banking company 45%
Any other business 29%

Here are the existing tax rates for corporations for the 2022 tax year:

(i) The tax rate imposed on a corporation’s taxable income for the 2007 tax year and beyond is 35%:

It being understood that the tax rate on the taxable income of a company other than a banking company is 34% for the tax year 20145:

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It being further understood that the tax rate on the taxable income of a company, other than a banking company, is 33% for the 2015 tax year:

“It being understood further that the tax rate of the taxable income of a company, other than a banking company, is 32% for the tax year 2016, 31% for the tax year 2017, 30% for the 2018 tax year and 29% for the 2019 tax year and beyond.

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(iii) where the taxpayer is a small business as defined in Article 2, tax is payable at the rate of 25%:

Provided that for the tax year 2019 and beyond, the tax rates are those indicated in the following table, namely:

Taxation year Tax rate
2019 24%
2020 23%
2021 22%
2022 21%
2023 and beyond 20%”
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