Pakistan Corporate – Other taxes

Updated on May 16, 2022

Value-added tax (VAT)

If items are not specifically exempted or subject to sales tax at a reduced rate, VAT (locally referred to as “sales tax”) is generally imposed at a rate of 17% on the value of the goods after taking into account applicable input credits.

All four provinces, including the Islamabad Capital Territory, Gilgit-Baltistan, and Azad Jammu and Kashmir, charge a sales tax on services ranging from 13% to 16%.

With a few exceptions, federal excise duty, federal sales tax, and state sales tax can all be offset against one other.

Sales tax regimes (e.g. retail price/fixed tax regime) or other reduced rates of sales tax are applied to supplies made by specified individuals or industries (e.g. wholesalers).

A 3% VAT on commercial imports adds to the regular sales tax that must be paid at the import stage.

A 17 percent sales tax is levied on local supplies made by people in the textile, leather, footwear, surgical goods, and sport goods industries. In some situations a reduced rate is available.

Customs and import duties

The Harmonized System (HS) Code is used to classify customs and other duties collected at the time of importation into the United States.

Excise duty

Taxes are levied on a variety of activities, including manufacturing, the importation of commodities and providing services. Under the constitution, the provinces are responsible for levying and collecting sales tax on services, which is a successor for FED.

Property taxes

Property tax is imposed and collected by provincial and municipal governments at a variety of rates, depending on the location of the property.

Stamp duty

Immovable property is subject to stamp duty when it is sold or transferred, with rates depending on the property’s location.

Payroll taxes

Employers are not obligated to pay any extra taxes in relation to their employees or their salaries, other from social security contributions (see below).

Social security contributions

Employers and employees alike contribute a small portion of their wages to social security and the Employees’ Retirement Income Security Act. It is the responsibility of the employer to gather and disburse funds on a monthly basis.