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Pakistan

Taxes

If you want to incorporate in Pakistan, reading this will help you becoming knowlegeable on the specific tax laws and rates for a LLC (Pvt Ltd) which is the most common company structure in Pakistan.

Pakistan taxes income earned offshore in the same way that it was accrued from local operations. The usual tax rate for income earned abroad, from our research, but seek professional advice, is 31%. Corporate tax rate is 31% for tax year 2017 and 30% for 2018 onwards. This ranks Pakistan as 153th overall in terms of corp. taxation rate internationally.

The valued added tax rate is 17.00%, which ranks Pakistan as 159th overall with regards to value added tax rate worldwide. In terms of other taxation, an employer will contribute 6% to the equivalent of a social security fund and an employee may not have to contribute. The overall complexity of the tax system is high. This is measured by average time to comply with a country's labor tax requirements is as it is 594hours. Contributing to this is the number of yearly labor tax payments, which is 47 in PK.

Thin capitalisation standards are in effect. This refers to any type of requirements on given company with respect todebt-to-asset ratios.
Dividend Income is taxed at a 12.5% rate. However, Group Taxation is allowed in Pakistan, and an exemption may apply for holding companies and subsidiaries of a wholly group that opt to be taxed as a single fiscal unit. A dividend is a distribution of a portion of an earnings of the business, passed by by the board of directors, to a particular class of shareholders. Dividends can be issued as shares of stock, cash payments, or other property.
Capital Gains are normally treated as business ordinary income and included to corporate income tax base. However, there may be reduced rates for certain capital gains from capital assets and the disposal of securities, provided that have been held prior the sale a certain amount of years. A capital gains tax is levied on the profits that a corporation or natural person realizes when they sell sells a capital asset for a price that is higher than the purchase price.

The interest withholding tax rate is estimated at 10%. Which means that the tax authorities expects LLC 's to withhold 10% of interests paid to non-residents. If non-resident recipient has a P.E. in Pakistan, payments on interests may be taxed at a 20% withholding tax rate. The dividends withholding tax rate is 20%. This means that the taxman expects legal entities to automatically withhold 20% of dividends remitted abroad. The royalties withholding tax rate 15%. This means that the tax authorities expects relevant legal entities to automatically withhold 15% of money remitted abroad on royalties. Withholding tax rates may be reduced under a tax treaty.
There is no known tax on wealth in Pakistan. There are no known inheritance taxes. There are real property and transfer taxes. There are commonly used research and development breaks on taxation in this country.

The above is not tax or legal advice for your particular tax obligations. Incorporations.io can point you to an expert in Pakistan who can give you the proper advice and help you need. Contact us today. Click the free consultation button above.

Country details

Pakistan
PKR
Islamabad
Asia
ur-PK, en-PK, Punjabi, sd, ps, brh
184,404,791

Tax treaties

Country Type Date Signed
Ireland DTC  1973-04-13
United States DTC  1957-07-01
United Kingdom DTC  1986-11-24
Tajikistan DTC  2004-05-13
Oman DTC  1999-06-12
Lebanon DTC  2005-08-31
Singapore DTC  1993-04-13
Uzbekistan DTC  1995-05-22
Portugal DTC  2000-06-23
Serbia DTC  2010-05-21
Qatar DTC  1999-06-04
Malaysia DTC  1982-05-29
Tunisia DTC  1996-04-18
Bangladesh DTC  1981-10-15
Turkey DTC  1985-11-14
Kyrgyzstan DTC  2005-01-18
Indonesia DTC  1990-10-07
Canada DTC  1976-02-24
Kazakhstan DTC  1995-08-23
Korea, Republic of DTC  1987-04-13
Spain DTC  2010-01-01
Romania DTC  1999-07-27
Finland DTC  1994-12-30
Jordan DTC  2006-03-02
Bahrain DTC  2005-06-27
United Arab Emirates DTC  1993-02-07
Poland DTC  1974-10-25
Libya DTC  1975-01-09
Hungary DTC  1992-02-24
Thailand DTC  1980-08-14
Turkmenistan DTC  1995-02-26
Brunei Darussalam DTC  2009-12-25
Netherlands DTC  1982-03-24
Malta DTC  1975-10-08
Saudi Arabia DTC  2006-02-02
Sri Lanka DTC  1981-10-05
France DTC  1994-06-15
Nigeria DTC  1985-10-10
Switzerland DTC  2005-07-19
Germany DTC  1994-07-14
Yemen DTC  2004-03-02
Viet nam DTC  2004-03-25
Iran DTC  1999-05-27
Denmark DTC  1987-10-22
Sweden DTC  1985-12-22
Azerbaijan DTC  1996-04-10
Nepal DTC  2001-01-25
Czech Republic DTC  2014-05-02
Belgium DTC  1980-03-17
Morocco DTC  2006-05-18
Japan DTC  2008-01-23
Ukraine DTC  2008-12-03
Egypt DTC  1995-12-16
South Africa DTC  1998-09-26
Belarus DTC  2004-07-23
Kuwait DTC  1998-06-30
Austria DTC  2005-08-04
Syrian Arab Republic DTC  2001-03-16
Mauritius DTC  1994-09-03
Bosnia and Herzegovina DTC  2004-08-24
Philippines DTC  1980-02-22
Italy DTC  1984-06-22
Norway DTC  1986-10-07
China DTC  1989-11-15

Tax treaties Map

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