Pakistan slaps 45% corporate tax on banks

ISLAMABAD: Pakistan has slapped corporate income tax at 45 per cent on banks, which is raised from 35 per cent.

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

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Through Finance Bill, 2022 the tax rate for banking companies have been proposed to increase to 45 per cent from existing 35 per cent.

In this regard, the bill proposed amendment to Division II, Part I of First Schedule of the Income Tax Ordinance, 2001.

Proposed Rates of Tax for Companies

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The rate of tax imposed on the taxable income of a company shall be as set out in the following Table, namely:-

Following are the existing rates of tax for corporate entities for tax year 2022:

(i) The rate of tax imposed on the taxable income of a company for the tax year 2007 and onward shall be 35%:

Provided that the rate of tax imposed on the taxable income of a company other than a banking company, shall be 34% for the tax year 20145:

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Provided further that the rate of tax imposed on the taxable income of a company, other than a banking company, shall be 33% for the tax year 2015:

“Provided further that the rate of tax imposed on taxable income of a company, other than banking company shall be 32% for the tax year 2016, 31% for tax year 2017, 30% for tax year 2018 and 29% for tax year 2019 and onwards.

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(iii) where the taxpayer is a small company as defined in section 2, tax shall be payable at the rate of 25%:

Provided that for tax year 2019 and onwards tax rates shall be as set out in the following Table, namely:—