What is Corporate Tax?
Corporate tax is also known as a company tax or corporation tax. Corporate tax is a direct tax which a jurisdiction imposes on the income of any corporation or analogous legal entities. Several countries impose such type of taxes on the national level. Corporate taxes are also imposed at the state or level local. The corporate tax of a country is applicable on:
Corporate Tax Rate in Pakistan
In Pakistan corporate tax is a type of tax which is collected from the companies. The amount of the corporate tax is based on the net income of the companies while they are exercising their business activity which is usually during one business year. An income source of income for the government of Pakistan is the revenue which they get from the corporate tax rate.
The corporate tax rate in Pakistan is 31 percent. From 1997 up to 2018, the average corporate tax rate in Pakistan was 34.6 percent. In the year 2000, the corporate tax rate of Pakistan reached the all-time high value of 43 percent while in 1998 the lowest value was recorded that was 30 percent.
The Government of Pakistan has decided to reduce the corporate tax rates from 30 percent in 2018 to 25 percent in 2023. In 2019 the corporate tax rate is going to be 29 percent after which is going to decrease by 1 percent every year up to 2023.
Super Tax was imposed in the year 2015 for the rehabilitation of the people who were internally displaced. Currently, the banking companies are being charged 4 percent while the non-banking companies, which have an income higher than Rs.500 million, are being charged 3 percent. Several companies have demanded that the government shall abolish the super tax.