Business taxes in Pakistan: calculator for sole proprietors and companies
Choose a sector, a legal form and a tax system, enter your annual revenue and expenses — the calculator shows every tax and contribution, the total and what you keep.
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Legal forms
Sole proprietor Sole proprietorship (individual business) — Income Tax Ordinance, 2001
You run the business as an individual: there is no separate legal entity and you are liable for business debts with all your assets. Business income is taxed at the rates for non-salaried individuals.
Requirements
Register for a National Tax Number (NTN) on FBR's IRIS portal (s. 181) and file the return with a wealth statement by 30 September after the tax year ending 30 June (s. 118(3)).
File on time to stay on the Active Taxpayers List (ATL): for persons not on the ATL most withholding rates are doubled (FBR withholding rate card, tax year 2027).
Sales tax registration (18%) with FBR is required for manufacturers (except cottage industry), wholesalers, distributors, importers, retailers liable to sales tax and online sellers of goods (Sales Tax Act, s. 3, s. 14).
Sales tax on services is levied by the provinces and the Islamabad Capital Territory under their own laws, with separate registration.
Sole proprietorSole proprietorship — normal tax regime (Income Tax Ordinance, 2001)
Profit is taxed at the non-salaried rates: 0% up to Rs 600,000, then 15–45%; above Rs 10 million a 10% surcharge on the tax is added. Tax is at least the 4% withheld by clients from receipts.
Conditions
Corporate clients withhold 4% from payments for IT services (s. 153(1)(b)); this is a minimum tax (s. 153(3)): tax cannot be less than 4% of receipts, even at a loss.
If the services count as 'independent professional services' (e.g. a software developer working independently), the withholding rate is 15% (Finance Act 2026), making the minimum tax 15% of receipts. The calculation uses 4% for IT services.
The calculation is for a person on the Active Taxpayers List (ATL); withholding rates are doubled for non-ATL persons.
Sales tax on services is provincial / ICT, with its own rates and registration rules; it is not included in the calculation.
The withholding rate that counts as minimum tax depends on the sector: IT 4%, other business services 14% (7% / 15% for some), and no withholding on sales to individuals (consumer services, trade, production) — only the 1.25% turnover tax under s. 113 where it applies.
Sole proprietorSole proprietorship — export of IT / IT-enabled services, final tax under section 154A
The bank withholds 0.25% from foreign-currency proceeds for exported IT/ITeS services; for PSEB-registered exporters in tax years 2024–2029 this is the final tax on that income — no slab rates and no expense accounting.
Conditions
Export only: clients abroad, proceeds received through an authorised bank. Registration and certification with the Pakistan Software Export Board (PSEB) is required; without it the rate is 1%.
The tax is final only if the return and withholding statements are filed; no credit for foreign tax is given. One may opt out each year in the return.
Sales tax on services is provincial / ICT, with its own rates and registration rules; it is not included in the calculation.
Sole proprietorSole proprietorship — export of other services, final tax under section 154A(1)(b)
The bank withholds 1% from foreign-currency proceeds for services rendered to clients abroad; this is the final tax on that income — no slab rates and no expense accounting.
Conditions
Only for other professional business services (marketing, design, translation, engineering, etc.) rendered abroad, with proceeds received through an authorised bank. IT has its own 0.25% regime with PSEB registration.
The tax is final only if the return and withholding statements are filed (s. 154A(2)); no credit for foreign tax is given.
Single member company Single member company (private limited company) — Companies Act, 2017
A legal entity with one member incorporated with the Securities and Exchange Commission of Pakistan (SECP); the owner is liable only up to the share capital. The company pays income tax on its profit; dividends to the owner are taxed separately.
Requirements
Incorporate with SECP; the company gets its own NTN and files its return by 31 December after a tax year ending 30 June (s. 118(2)(a)).
The minimum tax of 1.25% of turnover (s. 113, Division IX) applies to every company whatever its turnover, if the normal tax is lower.
As a 'prescribed person' the company itself must withhold tax when paying for goods, services and contracts (s. 153(1), (7)) and file withholding statements.
Sales tax (goods — FBR, services — provinces) as for a sole proprietor.
CompanySingle member company (private limited, Companies Act, 2017)
The company pays 20% of profit as a small company (turnover up to Rs 250 million) or 29%, but not less than the 4% withheld by clients from receipts. Dividends bear a 15% final tax.
Conditions
Small company (20%): registered after 1 July 2005, paid-up capital plus undistributed reserves ≤ Rs 50 million, up to 250 employees, turnover ≤ Rs 250 million, not formed by splitting up an existing business. Otherwise 29%. The calculation checks turnover only.
Corporate clients withhold 4% from payments for IT services (s. 153(1)(b)); this is a minimum tax (s. 153(3)): tax cannot be less than 4% of receipts, even at a loss.
Dividends: 15% final tax; 25% if the company paid no tax because of exemption or losses.
A PSEB-registered company exporting IT services can also use the 0.25% regime of s. 154A.
The calculation is for a person on the Active Taxpayers List (ATL); withholding rates are doubled for non-ATL persons.
Sales tax on services is provincial / ICT, with its own rates and registration rules; it is not included in the calculation.
The withholding rate that counts as minimum tax depends on the sector: IT 4%, other business services 14% (7% / 15% for some), and no withholding on sales to individuals (consumer services, trade, production) — only the 1.25% turnover tax under s. 113 where it applies.
Software development, IT services, consulting for companies and entrepreneurs.
Corporate clients withhold 4% from payments for IT and IT-enabled services (Division III, Part III, para (2)(i), proviso); this is a minimum tax (s. 153(3)). Independent software developers may face 15% (para (2)(ii)).
Exporting IT services through a bank with PSEB registration: 0.25% of proceeds as final tax up to tax year 2029; without registration 1% (Division IVA).
Sales tax on IT services is provincial and is not included in the calculation.
Other business services draft — data being checked
Marketing, design, translation, engineering, bookkeeping and other professional services to companies.
Withholding by corporate clients on service fees is a minimum tax (s. 153(3)): 7% for listed services (advertising other than media, engineering and architecture, training, testing, etc.), 15% for independent professionals (doctors, lawyers, architects, accountants), 14% for all other services (design, translation, etc.). The calculation uses 14%.
Services to clients abroad paid through a bank: 1% of proceeds as final tax (s. 154A(1)(b), Division IVA) — shown as a separate option.
Sales tax on services is provincial (separate registration) and is not included in the calculation.
Services to individuals draft — data being checked
Household services, repairs, beauty, tutoring, photography — for private customers.
Private customers do not withhold tax, so there is no s. 153 minimum tax. The 1.25% turnover minimum tax (s. 113) applies to an individual only from Rs 100 million turnover, to a company always.
FBR may by notification set special procedures and fixed tax for small traders and shopkeepers (s. 99B) and for small businesses, medical practitioners and educational institutions (s. 99C) in specified cities.
Sales tax on services to individuals is provincial (separate registration) and is not included in the calculation.
Trade in goods draft — data being checked
Retail and wholesale, including an online shop (excluding excise goods).
The calculation is for sales to individuals (retail, online shop): no withholding; the 1.25% turnover minimum tax (s. 113) applies to an individual from Rs 100 million turnover and to a company always; for e-commerce turnover and Tier-1 retailers integrated with FBR it is 0.25% (Division IX).
Sales to companies: the buyer withholds 5.5% (individual seller) or 5% (company) of the amount, and this is a minimum tax (s. 153(1)(a), (3)) — with a low markup it can exceed the tax on profit.
Manufacturers and distributors collect 0.5% advance tax on sales to retailers (s. 236H); payment intermediaries and cash-on-delivery couriers collect 1% / 2% from online sellers (s. 153(2A)).
Sales tax is 18%. Tier-1 retailers (chain stores, shops in air-conditioned malls, electricity bill over Rs 1.2 million a year, turnover over Rs 200 million) must integrate their point of sale with FBR (Sales Tax Act, s. 2(43A), s. 3).
Manufacturing draft — data being checked
Making and selling your own products: food, furniture, clothing, handmade goods.
The calculation is for sales without withholding (to individuals and small buyers); the 1.25% turnover minimum tax (s. 113) applies to an individual from Rs 100 million turnover and to a company always.
Sales to companies: the buyer withholds 5.5% (individual) or 5% (company); for a company manufacturing the goods it is creditable rather than minimum tax (s. 153(3), proviso (a)), for an individual it is a minimum tax.
Sales tax is 18%; a manufacturer must register, except a cottage industry (no industrial gas or electricity connection, residential area, up to 10 workers, turnover up to Rs 8 million) — its supplies are exempt (Sales Tax Act, s. 2(5AB), s. 14, Sixth Schedule item 3).
Assumptions
One owner, resident of Pakistan on the Active Taxpayers List, no employees, no other income, no children; full tax year 2027 (1 July 2026 – 30 June 2027).
Regular regime and company: clients are companies in Pakistan that withhold 4% from IT services payments. Export form: all receipts are exports through a bank and the owner is PSEB-registered.
EOBI contributions apply to employees only, so the owner pays none. Sales tax on services is not included.
Company: the owner takes no salary; profit after tax is either fully paid out as dividends or retained.
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