Taxation in Pakistan

Taxation
An aspect of fiscal policy
Policies Government revenue Tax revenue Non-tax revenue Tax law Tax bracket Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Double taxation Representation Unions Medical savings account Tax, tariff and trade
Economics Price effect Excess burden Tax incidence Laffer curve Optimal tax Theory Optimal capital income taxation
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Private tax collection Tax farming
Noncompliance Tax avoidance Tax evasion Tax resistance Tax haven Smuggling Black market Transfer mispricing Unreported employment Tax shelter
Distribution Tax rate Progressive Regressive Proportional
Types Direct Indirect Per unit Ad valorem In rem Capital gains Carbon Consumption Dividend Ecotax Excise Fuel Georgist Gift Gross receipts Income Inheritance (estate) Land value Payroll Pigovian Property Sales Sin Single Stamp Steering Turnover Value-added (VAT) Corporate profit Excess profits Windfall profits Negative (income) Flat Wealth
International Financial transaction tax Currency transaction tax Tobin tax Spahn tax Tax equalization Tax treaty Permanent establishment Transfer pricing European Union FTT
Trade Custom Duty Tariff Import Export Tariff war Free trade Free trade zone Trade agreement
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country List of countries by tax rates Tax revenues as %GDP Albania Algeria Argentina Australia Azerbaijan Bangladesh Bhutan Bulgaria Canada China Colombia France Germany Greece Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Malta Namibia Netherlands New Zealand Norway Pakistan Palestinian territories Peru Philippines Poland Russia Singapore South Africa Sweden Switzerland Tanzania United Kingdom United States Uruguay

Pakistan's Current Taxation system is defined by Income Tax Ordinance 2001, promulgated on 13 September 2001, which became effective from 1 July 2002.

History

Income Tax Act of 1922

Income Tax Act of 1929: prevalent in the British Raj and was adopted by the Government of India as its Income Tax Law.

Income Tax Ordinance (1979)

The Income Tax Ordinance was the first law on Income Tax which was promulgated in Pakistan from 1 July 1979 by Government of Pakistan.

Income Tax Ordinance 2001

To update the tax laws and bring country's law in accordance with international standards, Income Tax Ordinance 2001 was promulgated on 13 September 2001, which became effective from 1 July 2002.

IT rules 2002

IT rules 2002 were promulgated by FBR on 1 July 2002 in exercise of powers granted under section 237 of the Ordinance.

Problems

Taxation in Pakistan is a complex system of more than 70 unique taxes administered by at least 37 agencies of the Government of Pakistan.

According to the International Development Committee, Pakistan had a lower-than-average tax take. Only 0.57% of Pakistanis, or 768,000 people out of a population of 190 million pay income tax.

Federal taxes

Federal taxes are administered by the Federal Board of Revenue.

Corruption

Further information: Corruption in Pakistan

According to a 2002 study, 99% of 256 respondents reported facing corruption with regard to taxation. Furthermore, 32% of respondents reported paying bribes to have their tax assessment lowered, and nearly 14% reported receiving fictitious tax assessments until a bribe was paid.

Further reading

• Bahl, R., Wallace, S., & Cyan, M. (2008). Pakistan: Provincial government taxation (No. paper0807). International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.