Tax Overview and Recommendations

1 Corporate Income Tax Corporate Income Tax Income Tax Corporate Tax Rate Residence Compliance requirements International Withholding Tax Rates 32 percent for tax year 2016, 31 percent for tax year 2017 and 30 percent for tax year 2018 and onwards (other than for a banking company for which the rate of tax is 35 percent). The exception to this is small companies, which are taxed at 25 percent. A company is considered to be resident in Pakistan if it is incorporated, formed by or under any law in force in Pakistan. Companies incorporated under foreign law are considered to be Pakistan resident if control and management of the affairs of the company is situated wholly in Pakistan at any time during the year. Resident companies are taxed on their worldwide income. Non-resident companies are taxed only on their Pakistan source income. Assessment system - Self assessment. However, an assessment under self assessment scheme may be subject to tax audit and amendment by the tax authorities. Filing due date For companies with an income year ending between 1 July and 31 December: 30 September following the end of the income year For companies with an income year ending between 1 January and 30 June: 31 December following the end of the income year Dividends paid to non-residents are subject to withholding tax of 12.5 percent. For dividends declared/distributed by a purchaser of a power project privatized by WAPDA (Water and Power Development Authority) or a company setup for power generation, the withholding tax rate on dividends is 7.5 percent. The withholding tax rate on dividend is 12.5 percent where the recipient is a filer of Pakistan tax return and 20 percent where the recipient is a non-filer. Royalties and fees for technical service paid to non-residents (that have no permanent establishment in Pakistan) are subject to withholding tax of 15 percent. KPMG © 2016 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. All rights reserved.

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