Every Pakistani business answers to at least two regulators: the FBR for income tax and sales tax on goods, and a provincial revenue authority for sales tax on services. Companies also report to the SECP. This guide sets out the main obligations, what changed in the Finance Act 2026, and how we keep clients compliant.
General information only. This article summarises rules, standards and effective dates as we understand them in October 2026. It is not tax, accounting or audit advice for your specific situation. Talk to us before making decisions.
At a glance
| Area | Headline rule | Authority |
|---|
| Corporate income tax | 29% for most companies; 20% for qualifying small companies; higher rates for banking companies | FBR |
| Super tax (section 4C) | Under the Finance Act 2026: nil for most persons with income up to Rs 500 million, 8% above that; 10% above Rs 150 million for banks, oil and gas exploration and fertiliser | FBR |
| Minimum tax (section 113) | Generally 1.25% of turnover where it exceeds normal tax, with carry-forward of the excess | FBR |
| Sales tax on goods | 18% standard rate, monthly returns | FBR |
| Sales tax on services | Provincial rates, generally 15% to 16% | PRA, SRB, KPRA, BRA; FBR for Islamabad |
| Company law | AGM, annual return and financial statements filed with the registrar | SECP |
Income tax for companies
- Tax year: the normal tax year runs from 1 July to 30 June. Companies can apply for a special tax year, for example a December year end, where their business or group requires it.
- Rates: 29% for most companies. Small companies that meet the definition in the Income Tax Ordinance 2001 pay 20%. Banking companies pay higher rates.
- Super tax: the Finance Act 2026 removed super tax for most persons with income up to Rs 500 million and cut the rate above that level from 10% to 8%. Banks, oil and gas exploration companies and fertiliser businesses still pay 10% on income above Rs 150 million. Check which tax year the new slabs apply to before you finalise a return.
- Minimum tax: where normal tax is lower than the turnover tax under section 113, the minimum tax applies, generally at 1.25% of turnover, with sector-specific rates. The excess can usually be carried forward and adjusted in later years.
- Advance tax: companies pay quarterly instalments of advance tax under section 147, based on their latest assessed tax or an estimate.
- Returns: companies with a tax year ending between 1 January and 30 June generally file by 31 December; other companies file by 30 September. The return goes through FBR's IRIS portal, with audited accounts where required.
- Withholding tax: businesses act as withholding agents on salaries, payments for goods and services, rent, contracts and payments to non-residents, and file periodic withholding statements. Missing these is one of the most common sources of FBR notices.
Sales tax on goods and services
- Federal sales tax: goods are taxed under the Sales Tax Act 1990 at a standard rate of 18%, with reduced, exempt and retail-price regimes for specific items. Registered persons file monthly returns.
- Provincial sales tax on services: services are taxed by the province where they are provided: the Punjab Revenue Authority, the Sindh Revenue Board, the Khyber Pakhtunkhwa Revenue Authority and the Balochistan Revenue Authority. Services in Islamabad are taxed under the Islamabad Capital Territory law administered by FBR. Businesses working across provinces often need several registrations.
- Input tax: input tax claims depend on suppliers being active taxpayers and on invoices matching what the supplier reports, so supplier vetting matters.
E-invoicing and digital compliance
FBR is moving sales tax compliance onto real-time digital invoicing. Tier-1 retailers must integrate their point-of-sale systems, and registered businesses are being brought onto FBR's electronic invoicing system in phases. The Finance Act 2026 tightened the rules:
- FBR can de-register or blacklist businesses that fail to integrate with its e-invoicing system;
- debit and credit notes move to an electronic adjustment mechanism;
- a tax credit is available for spending on integration with FBR's e-invoicing system;
- companies must file machine-readable financial statements with FBR;
- penalties for failing to file returns or issue proper invoices have increased substantially.
For most businesses, this means the accounting system, the invoicing system and the tax return now have to agree with each other automatically. See our article on AI-powered bookkeeping for how we keep records digital from the start.
SECP and company law
- Annual general meeting: under the Companies Act 2017, a company generally holds its AGM within 120 days of its financial year end.
- Financial statements: audited financial statements are approved at the AGM and filed with the registrar, generally within 30 days of the meeting.
- Annual return: the annual return is filed within 30 days of the AGM, or by the prescribed date for companies not required to hold one.
- Event-based filings: changes in directors, registered office, share capital, charges and beneficial ownership must be reported within the prescribed time, through SECP's online portal.
- Reporting framework: listed companies, public interest companies and large-sized companies use full IFRS. Medium-sized companies use IFRS for SMEs, and small-sized companies use the accounting and financial reporting standard for small-sized entities.
Businesses with foreign owners or clients
Payments abroadRoyalties, fees and dividends paid to non-residents usually need tax withheld, with treaty relief where available.
Exports of servicesIT and other service exporters have special regimes, which depend on bringing proceeds back through banking channels.
Related partiesCharges between group companies need documented, arm's-length pricing.
Foreign currencyForeign currency balances and loans need consistent translation under IAS 21.
Group reportingParent companies abroad often need IFRS reporting packs on their own timetable.
RepatriationDividends and profit transfers follow State Bank of Pakistan foreign exchange rules.
How we keep clients compliant
- One compliance calendar: we map every FBR, provincial and SECP deadline for your companies and remind you well in advance.
- Clean books first: returns are only as good as the ledger behind them, so we reconcile before we file.
- Notice handling: we reply to FBR and provincial notices and represent you in proceedings.
- Clear fixed fees: monthly packages or project pricing, agreed before we start.
Frequently asked questions
Do I need to register for provincial sales tax if I already have an FBR sales tax number?
Often yes. FBR registration covers sales tax on goods. If you provide taxable services, you usually also need to register with the authority of each province where you provide them.
Does a private limited company need an audit?
Most companies must have their annual financial statements audited, although some small private companies can be exempt. We can confirm your position and prepare audit-ready accounts either way.
What happens if I miss a return deadline?
Late returns attract penalties and default surcharge, and repeated non-filing can affect your active taxpayer status. Contact us as early as possible so we can file or apply for an extension.
Need help with FBR, provincial or SECP compliance?
Book a free consultation and we will map your obligations and filing calendar.
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