Current Corporate Tax Rate in Pakistan – 2025 Overview

As of 2025, the current corporate tax rate in Pakistan is 29%.The system of corporate tax in Pakistan has a combination of stable base rates, targeted incentives for small businesses, and industry-specific super taxes to increase revenue from high-income sectors.

The following is a detailed analysis of the existing rates, recent changes, trend history, and Pakistan’s comparison to the world.

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Current Corporate Tax Rates in Pakistan (2025)

Standard Corporate Tax Rate

Most companies in Pakistan fall under the standard corporate tax bracket, which has remained at 29% since 2021. This rate applies to the net taxable income of all incorporated businesses except small companies and banks.

Stable Since 2021: After years of fluctuation, the 29% rate marks a period of stability, aimed at providing predictability for investors and businesses.

Corporate Tax for SMEs in Manufacturing

Annual turnover up to PKR 250 million.
Registration: With FBR (IRIS portal) or SMEDA.
Tax Rates (Normal Regime):
- Up to PKR 100M: 7.5% of taxable income
- PKR 100M–250M: 15% of taxable income
Optional Final Tax Regime (FTR):
- Up to PKR 100M: 0.25% of turnover
- PKR 100M–250M: 0.5% of turnover
- Once chosen, FTR applies for 3 years. No audit for FTR filers.

Corporate Tax for Exporters

Goods: 1% tax is now the minimum, not final. Must calculate the actual tax and pay the difference if higher. Super tax applies now.
Services:
- General exporters: 1% (final)
- IT/ITeS (registered): 0.25% (final till 2026)
- Can choose normal tax instead.

Corporate Tax for Builders and Developers

Tax Rates on Gross Receipts:
- Buildings only: 10%
- Plots only: 15%
- Both: 12%
No credit allowed beyond declared profit unless higher income is taxed normally.

Corporate Tax for Permanent Establishments (PEs)

Treated as separate business entities.
Can deduct admin/head office expenses.
Some payments (e.g., interest) are not deductible.
Minimum Tax on Gross Receipts:
- Goods: 5%
- Services: 9% (some specific services: 4%)
- Contracts: 8%
- Higher rates apply to inactive taxpayers.
- Turnover tax: 1.25% (or 0.25–0.75% for some sectors)

Corporate Tax for Non-Resident Contractors

Income from integrated supply+construction contracts is taxable in Pakistan.
WHT can be reduced to 1.6% (or 1% for IPPs in AJK) with FBR approval.

Corporate Tax for Minimum Tax on Turnover

Companies must pay at least 1.25% of turnover if the normal tax is lower.
Reduced rates (0.25–0.75%) apply to some sectors.
Excess tax paid can be adjusted over 3 years.

Corporate Tax for Transaction-Based Minimum Taxes

Certain WHTs on goods, services, and contracts count as minimum tax.
Import tax:
- Raw materials: Adjustable
- Commercial imports: Minimum tax

Alternate Corporate Tax (ACT)

Companies pay higher:
- 17% of accounting profit or
- Normal corporate tax
Not applicable to banks, insurance, oil/gas, or exempt entities.

Corporate Tax for Banking Companies

Banks face the highest corporate tax rate at 39%, which has increased from 35%. In addition, if their income exceeds PKR 300 million, they are subject to a:

Super Tax of 10%

This places the effective tax burden for large banks at nearly 49%, positioning them among the most heavily taxed sectors.

Other Companies and Super Tax Application

Although the base tax rate is 29%, a super tax is applied progressively on income, especially in high-earning sectors. The super tax structure varies by income slab and industry type.

Income Range	Super Tax Rate (General)
Up to PKR 150 million	0%
PKR 150M – 200M	1%
PKR 200M – 250M	2%
PKR 250M – 300M	3%
PKR 300M – 350M	4%
PKR 350M – 400M	5%
PKR 400M – 500M	6%
PKR 500M – 600M	7%
PKR 600M – 800M	8%
PKR 800M – 1B	9%
Above PKR 1B	10%

Sector-Specific Super Tax (Introduced in 2022)

To increase revenue from profitable sectors, Pakistan introduced a super tax of up to 10% on large-scale industries. This is in addition to the corporate tax and impacts companies in the following sectors:

Airlines
Automobiles
Beverages
Cement
Chemicals
Tobacco
Fertiliser
Oil
Pharmaceuticals
Sugar
Textiles

This move sparked controversy, with concerns about retrospective application and unequal treatment of industries. The matter is currently under review by the Supreme Court of Pakistan.

Reduced Rate for Small Companies – 20%

Companies classified as “small companies” under the Income Tax Ordinance 2001 benefit from a reduced tax rate of 20%, which was cut from 21%.

Criteria for a Small Company

To qualify, a company must:

Be registered under the Companies Act, 2017
Have an annual turnover not exceeding PKR 250 million
Paid-up capital plus undistributed reserves not exceeding PKR 50 million
Not be part of an associated group
Not engaged in banking, insurance, oil exploration, or other specified sectors

This policy aims to promote entrepreneurship and ease the tax burden for SMEs.

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Corporate Tax Rate History | Change in Corporate Tax Rate

2000: Corporate tax peaked at 43%
2000–2021: Gradual decrease aligned with economic reforms and global trends
2022–2025: Super tax added amid fiscal pressures, though the base rate stayed at 29%

Average corporate tax (1997–2025): ~33.19%

Corporate Tax Rates By Country | Where Pakistan Stands

Country	Corporate Tax Rate
Pakistan	29% (standard)
Singapore	17%
Romania	16%
Qatar	10%
UAE	9% (introduced in 2023)
Saudi Arabia	20%
South Africa	27%
OECD Average	24%

Pakistan’s rate is higher than many Asian peers, potentially impacting its investment competitiveness, especially when combined with super tax layers.

Economic Implications of Corporate Tax Changes

Effects of Lowering the Corporate Tax Rate

Attract foreign direct investment (FDI)
Increase private sector growth and job creation
Reduce incentives for profit shifting to tax havens
Improve compliance and widen the tax base

Risks of High Corporate Taxes

Reduced business profitability
Discouragement of new investment
Shift towards tax avoidance or evasion
Increased burden on productive sectors

Tax policy should strike a balance between revenue generation and economic growth.

How to Calculate Corporate Tax?

The effective corporate tax rate can differ from the statutory rate due to deductions, tax credits, and allowances.

Formula:

The formula to calculate corporate tax is:

Effective Corporate Tax Rate = Income Tax Paid / Earnings Before Tax (EBT)

Businesses often use this calculation for internal planning and investment decisions. You can use the corporate tax Rate calculator to do this calculation

Corporate Tax Rate Table

Company Type	Corporate Tax Rate	Super Tax
Small Companies	20%	1%–2% depending on income mn,gturi4
Banking Companies	39%	An additional 10% if income > PKR 300 million
Other Companies	29%	1%–10% based on income and sector
High-Earning Sectors	Varies (29% + 10%)	Up to 10% sector-specific super tax

Final Takeaways | Corporate Tax Rate in Pakistan

Plan around the 29% base corporate tax, but factor in super tax for higher incomes.
If you’re a small business, consider incorporation to benefit from the 20% tax rate.
For large firms, especially in targeted sectors, prepare for effective rates approaching or exceeding 39–49%.
Monitor legal developments regarding the super tax, especially if you’re in an affected industry.
Use effective tax rate analysis for better budgeting and financial forecasting.

For more information, seek help from a tax consultant in Pakistan.

References