Tax
Income Tax Ordinance 2001 federally, sales tax on services provincially
The Income Tax Ordinance 2001 governs direct tax with a 29 percent corporate rate. Sales tax on goods is federal at 18 percent, while sales tax on services is levied by each province separately.
Key rules
- Deadline — Company return by 31 December for a June year end
- Deadline — Monthly sales tax return by the 18th of the following month
- Deadline — Quarterly advance tax under section 147
Governing law
- Income Tax Ordinance, 2001
- Sales Tax Act, 1990
- Federal Excise Act, 2005
- Sindh Sales Tax on Services Act, 2011
- Punjab Sales Tax on Services Act, 2012
In practice
The split between federal goods tax and provincial services tax creates genuine double-taxation disputes where a supply could be characterised either way, and the Supreme Court has heard several. Withholding tax is extensive and functions as much of the collection system. Non-filers face higher withholding rates and restrictions on some transactions. Treaty relief requires a certificate and is claimed through the annual return.