Rates for Tax Year 2027
| Company type | Rate |
|---|---|
| Ordinary company | 29% |
| Small company | 20% |
| Banking company | 42% (down from 43%) |
A "small company" under the Ordinance is a company with turnover and paid-up capital below set limits and fewer than a set number of employees, and it must not be formed by splitting up an existing business. Check the current definition before claiming the 20% rate.
Super tax
Super tax under Section 4C is charged on top of normal corporate tax, on high-earning companies. For Tax Year 2027, the Finance Act 2026 set it at 8% of income for most companies where income exceeds Rs 500 million, and 10% for banks and certain listed sectors where income exceeds Rs 150 million. Once the threshold is crossed, the rate applies to the whole income. Companies whose exports exceed 80% of turnover are exempt. Use the super tax calculator for more detail.
Examples
| Company | Taxable income | Corporate tax | Super tax | Total |
|---|---|---|---|---|
| Small company | Rs 20,000,000 | Rs 4,000,000 | Rs 0 | Rs 4,000,000 |
| Ordinary company | Rs 200,000,000 | Rs 58,000,000 | Rs 0 | Rs 58,000,000 |
| Ordinary company | Rs 800,000,000 | Rs 232,000,000 | Rs 64,000,000 | Rs 296,000,000 |
| Bank | Rs 5,000,000,000 | Rs 2,100,000,000 | Rs 500,000,000 | Rs 2,600,000,000 |
Minimum tax still applies
Even a loss-making company usually pays something. Minimum tax on turnover under Section 113 applies when normal tax is lower, generally 1.25% of turnover. Many companies also face final or minimum taxes on specific receipts, such as imports and contracts. See the minimum turnover tax calculator.
Dividends
When a company pays dividends, shareholders pay tax again, generally 15% for filers. So the combined burden on profit distributed by a Pakistani company is well above the headline 29%. Plan distributions with that in mind.
Advance tax
Companies pay advance tax in quarterly instalments under Section 147, based on the latest assessed tax. The final return, due by 31 December for most companies with a June year end, settles the balance.
Getting the taxable income right
Taxable income is not the same as accounting profit. Depreciation is replaced by tax depreciation, some expenses are disallowed, and certain income is exempt or taxed separately. Enter your taxable income after these adjustments for a reliable estimate.
Company or sole proprietor?
Business owners often ask whether forming a private limited company would cut their tax. For a profitable business, it can. An individual's business income above Rs 5.6 million is taxed at 45%, plus a 10% surcharge above Rs 10 million. A company pays a flat 29%. But company profits paid out as dividends are taxed again at 15%, and running a company means audit fees, SECP filings and more paperwork.
As a rough guide, incorporation starts to make sense when profits are well into the millions and the owners don't need to take everything out each year. Below that, the extra cost and effort often outweigh the saving. Talk to an accountant who can model both options with your real numbers.
Tax credits for companies
Companies can reduce their tax through credits for things like investment in plant and machinery in certain cases, employment generation schemes, and listing on the stock exchange. Availability changes almost every budget. If you're planning a big investment, check what's currently on offer before you commit.
Related calculators
- Super tax calculator, to see whether your company crosses the Rs 500 million line and how much the 8% adds.
- Minimum turnover tax calculator, to check whether 1.25% of turnover would come out higher than your tax on profit.
- Business tax calculator, to compare company tax with what the same profit would cost as a sole proprietor or partnership.
Frequently asked questions
What is the corporate tax rate in Pakistan for 2026-27?
29% for most companies, 20% for small companies and 42% for banking companies.
Does super tax apply to all companies?
No. For Tax Year 2027 it applies to most companies only above Rs 500 million of income, and to banks above Rs 150 million.
What is a small company?
A company that meets limits on turnover, paid-up capital and employees set in the Ordinance, and is not formed by splitting an existing business.
Do loss-making companies pay tax?
Usually yes, through minimum tax on turnover under Section 113.
Rates: Income Tax Ordinance 2001 and its schedules as amended by the Finance Act 2026, plus FBR's withholding tax rate card for Tax Year 2027. Results are estimates. Check with FBR or a tax adviser before acting on them.