Every registered company in Pakistan — from a small Pvt Ltd to a full-scale bank — pays income tax at a rate that depends on its category, and on top of that, larger and more profitable firms face additional layers like super tax and minimum turnover tax. Here's how it all fits together for tax year 2026.
Standard Corporate Tax Rates
| Company Type | Tax Rate |
|---|---|
| Public/Private Limited Company | 29% |
| Small Company (as defined under the Ordinance) | 20% |
| Banking Company | 39% |
| Modaraba | 25% |
To qualify as a "small company" and access the reduced 20% rate, a company must keep paid-up capital plus reserves under the prescribed limit, employ no more than 250 people, keep turnover under Rs. 250 million, and not be a spin-off carved out of a larger existing business.
Super Tax — Tiered Rates for Large Companies
Beyond the standard rate, companies with substantial income also pay super tax under Section 4C, calculated on total income above the threshold:
| Income Slab | Super Tax Rate |
|---|---|
| Up to Rs. 150 million | 0% |
| Rs. 150M – 200M | 1% |
| Rs. 200M – 250M | 2% |
| Rs. 250M – 300M | 3% |
| Rs. 300M – 350M | 4% |
| Rs. 350M – 400M | 6% |
| Rs. 400M – 500M | 8% |
| Above Rs. 500 million | 10% |
Super tax is layered on top of regular corporate tax and mainly bites into the profits of large, highly profitable firms and specific sectors singled out by the Finance Act.
Minimum Turnover Tax — The Floor Nobody Can Go Below
Even a company reporting a loss or a thin profit margin generally cannot escape tax entirely. Section 113 requires a minimum tax of 1.25% of turnover in most cases (some sectors, like distributors of specified goods, get lower rates). This exists precisely to stop high-revenue companies from artificially minimizing declared profit to dodge tax.
Worked example: A company with Rs. 50 million in turnover but only Rs. 2 million in declared profit would owe roughly Rs. 580,000 under the standard 29% rate. But since 1.25% of Rs. 50M = Rs. 625,000, the higher minimum tax figure applies instead.
Tax Credits Companies Can Claim
- Investment in plant and machinery, subject to conditions
- Enlistment on a recognized stock exchange
- Charitable donations made to approved institutions
- Group relief and group taxation benefits for qualifying corporate structures
Legal Ways to Reduce Corporate Tax
Before anything else, make sure every allowable deduction is actually being claimed — depreciation on fixed assets, R&D spend, staff training costs, and contributions to approved pension or provident funds are all fully deductible. Companies that skip these, or apply the wrong depreciation rate for a given asset class, routinely overpay year after year without realizing it.
Advance tax installments matter too: falling behind triggers a KIBOR-linked surcharge that quietly eats into profit. On the credit side, review whether your company qualifies for plant and machinery investment credits, approved-institution donation credits, or PSX enlistment credits — these are frequently overlooked and a good tax advisor will catch them.