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|
|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|
|2023 and beyond||20%”|