Corporate income tax rates in Pakistan for 2021-2022

Corporate income tax rates in Pakistan for 2021-2022

The Federal Board of Revenue (FBR) has issued updated income tax rates to be applicable on companies for tax year 2022. The tax rates are available in the amended Income Tax Ordinance, 2001.

The corporate income tax rate for tax year 2021-2022 shall be 29 per cent.

The government has gradually reduced the income tax rates for companies. The tax rate at 35 per cent was applicable on corporate entities during year 2007 till 2014.

This rate of tax was brought down to 34 per cent in 2014 and then 33 per cent in 2015.

Further, the tax rate further reduced to 32 per cent for tax year 2016, 31 per cent for tax year 2017, 30 per cent for tax year 2018. Finally the tax reduced and fixed at 29 per cent for the tax year 2019 and onwards.

The reduction in tax rates is not available in case of banking companies. The financial institutions are still liable to pay 35 per cent of their income.

Previously, the government announced to reduce the corporate tax rates, other than banking companies, from 29 per cent to 25 per cent by tax year 2023. This amendment in the Income Tax Ordinance, 2001 was withdrawn through Finance Act, 2019.

In case of a small company, the corporate income tax rate was 25 per cent. However, through tax year 2019, the tax rate has been amended and it will be reduced to 20 per cent by tax year 2023 and onwards.

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