Pakistan

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

35%

   
Tax rate on long-term capital gains Capital gains are taxed at the rate of 25% if assets were held for more than 12 months. If held for less than 12 months, capital gains are taxed at normal corporate rates.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies The tax on dividends is included in the corporate tax for residents. Concerning non-residents, dividends are taxed at the rate of 15%.
   
Tax rate on branches Foreign branches are taxed on profits made in Pakistan at the normal corporate rates.




Income tax

Fiscal year The fiscal year begins on January 1st and ends on December 31st of the same year.
   
Income tax rate Tax Schedule 2005: the rate is progressive, it varies between 7.5 and 35%.
From 0 to 100,000 PKR 0%
From 100,000 to 150,000 PKR7.5%
From 150,000 to 300,000 PKR12.5%
From 300,000 to 400,000 PKR 20%
From 400,000 to 700,000 PKR 25%
Beyond 700,000 PKR35%
   
Tax deductions or other allowances Tax deduction allowances in Pakistan:
Donations to charitable organizations are deductible up to a certain limit.
Individual fixed deductions:
50 000 PKR for single employees, 60 000 PKR for wage-earning women and 40 000 PKR for the others.
50% of special deduction for elderly people of 65 years-old at least, with an annual income which does not exceed 200 000 PKR.
There are other tax deduction allowances according to the status of each.



VAT rates

Standard rates 15% (General Sales Tax - GST)
   
Reduced rates Reduced rates vary between 0% and 12,5%.



Other important taxes


Name of tax
Rate
Rights of recordings  
0,4% to 14%  
Wealth tax  
abolished  
Tax on the contract execution  
5% to 6%  
Land taxes  
7,50%  


 

Accounting

Introduction
The accounting practices in Pakistan are established on the
"International Accounting Standards Committee" (IASC) basis.
The accounting(countable) rules(rulers).


Obligations and publications
The Pakistani companies have to publish annually their own accounts, financials and audit reports.

Certification and auditing
The control of foreign accounts is made within the "Auditor General Department" and statements are sent to shareholders by this authority.
The audit certificates are delivered in accordance with the audit reports guide establishes by "the Auditor General Department".
The control of accounts must be made by an external auditor of the company.

Professionals and representative organizations
The "Institute of Cost and management Accountants of Pakistan".



Useful links
For further information, please contact the Board of Investment of Pakistan.

Last modified in June 2006
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