Pakistan: Living There - Tax Issues
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Living There
INDIVIDUAL TAXATION
Residents are taxed on their worldwide income.
The tax year is the 12-month period ending on 30 June and is denoted by the calendar year in which it ends. For example, the period from 1 July 2008 to 30 June 2009 is known as the tax year 2009.
INCOME TAX
There are five categories of income: salaries and wages, income from property, income from business, capital gains, and income from other sources.
Income tax is levied at progressive rates, up to 25%. Female taxpayers whose income does not exceed PKR125,000 (US$1,586) annually are not liable to pay any income tax.
INCOME TAX |
|
| TAXABLE INCOME, PKR (US$) | |
| Up to 100,000 (US$1,269) | |
| 100,000 – 110,000 (US$1,396) | |
| 110,000 – 125,000 (US$1,586) | |
| 125,000 – 150,000 (US$1,904) | |
| 150,000 – 175,000 (US$2,221) | |
| 175,000 – 200,000 (US$2,538) | |
| 200,000 – 300,000 (US$3,807) | |
| 300,000 – 400,000 (US$5,076) | |
| 400,000 – 500,000 (US$6,345) | |
| 500,000 – 600,000 (US$7,614) | |
| 600,000 – 800,000 (US$10,152) | |
| 800,000 – 1,000,000 (US$12,690) | |
| 1,000,000 – 1,300,000 (US$16,498) | |
| Over 1,300,000 (US$16,498) | |
| Source: Global Property Guide | |
For individuals whose salaries exceed 50% of their total income, a different set of income tax rates, effective from the tax year 2009. Female taxpayers who fall under this category and whose income does not exceed PKR240,000 (US$3,046) annually are not liable to pay any income tax.
INCOME TAX |
|
| TAXABLE INCOME, PKR (US$) | |
| Up to 180,000 (US$2,284) | |
| 180,000 – 250,000 (US$3,173) | |
| 250,000 – 350,000 (US$4,442) | |
| 350,000 – 400,000 (US$5,076) | |
| 400,000 – 450,000 (US$5,711) | |
| 450,000 – 550,000 (US$6,980) | |
| 550,000 – 650,000 (US$8,249) | |
| 650,000 – 750,000 (US$9,518) | |
| 750,000 – 900,000 (US$11,421) | |
| 900,000 – 1,050,000 (US$13,325) | |
| 1,050,000 – 1,200,000 (US$15,228) | |
| 1,200,000 – 1,450,000 (US$18,401) | |
| 1,450,000 – 1,700,000 (US$21,574) | |
| 1,700,000 – 1,950,000 (US$24,746) | |
| 1,950,000 – 2,250,000 (US$28,553) | |
| 2,250,000 – 2,850,000 (US$36,168) | |
| 2,850,000 – 3,550,000 (US$45,051) | |
| 3,550,000 – 4,550,000 (US$57,741) | |
| 4,550,000 – 8,650,000 (US$109,772) | |
| Over 8,650,000 (US$109,772) | |
| Source: Global Property Guide | |
Residents are entitled to some deductions:
- Basic personal exemption of PKR180,000 (US$2,284) for each male taxpayer
- Basic personal exemption of PKR240,000 (US$3,046) for each female taxpayer
Rental Income Tax
As of 2007, income from property is subject to a presumptive tax regime. Income from leasing property is subject to a 5% final withholding tax levied on the gross rent.
Individuals earning rental income not exceeding PKR150,000 (US$1,904) are exempted from taxation if they have no other sources of income.
CAPITAL GAINS
Capital gains realized by individuals from selling real property are not taxed in Pakistan unless sales of real property are part of the individual’s business.
Capital gains in connection with a taxpayer’s business activities are considered as business income and taxed accordingly.
PROPERTY TAX
Property Tax
Property tax is generally levied at a flat rate of 10% on the property’s value. However, property tax is levied at progressive rates in the Punjab province.
Capital Value Tax
Individuals who purchase real property in urban areas or acquire the right to use the real property for more than 20 years are liable to pay capital value tax. The tax is levied at 2% on the property’s recorded value. If no property value is recorded, the tax is levied at PKR50 (US$0.64) per square yard of the property.
Pakistan - more data and information
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