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HOW TO REGISTER FOR IMPORT AND EXPORT IN PAKISTAN WITH PAKISTAN SINGLE WINDOW(PSW)?

by PAKISTAN SINGLE WINDOW(PSW)?

HOW TO REGISTER FOR IMPORT AND EXPORT IN PAKISTAN WITH PAKISTAN SINGLE WINDOW(PSW)?

The Pakistan Single Window (PSW) is an integrated digital platform introduced by the Government of Pakistan under the Pakistan Single Window Act, 2021. It allows traders, importers, exporters, and clearing agents to conduct cross-border trade transactions through a unified portal. The PSW aims to simplify import-export documentation, reduce costs, enhance transparency, and eliminate manual paperwork.

All individuals and businesses intending to engage in import or export activities in Pakistan must register with PSW. Below is a complete and updated guide for 2025 on how to register with PSW and become a compliant trader.

Who Needs to Register with PSW?

• Importers and Exporters (individuals or registered businesses)
• Clearing & Forwarding Agents
• Customs Brokers
• Manufacturers involved in international trade
• Third-party logistics companies (3PLs)
• Foreign-registered companies with trade operations in Pakistan

Prerequisites for PSW Registration

To register for import and export through PSW, you must have the following:
• National Tax Number (NTN) or Free Tax Number (FTN)
• Sales Tax Registration Number (STRN) (if applicable)
• For companies: SECP Registration Number or CUIN (Computerized Unique Identification Number)
• Valid Subscriber Identification Module (SIM) registered in the name of the individual applying
• CNIC number of the applicant
• Biometric verification via NADRA’s e-Sahulat centers
• Active email address (must be the same as recorded in the FBR IRIS system)
• Passport and company registration proof (for foreign companies or diplomats)

Step-by-Step Guide for PSW Registration (2025 Process)

Step 1: Obtain NTN and STRN (if not already registered)

• Apply for an NTN and Sales Tax Registration Number via FBR IRIS Portal
• These credentials are mandatory to initiate any PSW registration

Step 2: Access PSW Registration Portal

• Go to https://www.psw.gov.pk
• On the homepage, click the “Subscribe” button
• Read and agree to the Terms & Conditions, select the checkbox, and click Proceed

Step 3: Provide Identification Information

• Enter the following:

  • NTN or CNIC

  • Email address (must match the one registered in IRIS)

  • Mobile number (registered in your name and verified via PMD)

Step 4: Pay Subscription Fee

• The PSW subscription is Rs. 500 (one-time, non-refundable)
• A Payment Slip ID (PSID) is generated
• Pay the PSID via ATM, mobile banking app, bank counter, or 1Link

Step 5: OTP Verification

• Email and mobile number will be verified using One Time Passwords (OTPs)
• These credentials will also be used for future logins and two-factor authentication

Step 6: Biometric Verification (Mandatory)

• Visit your nearest NADRA e-Sahulat Center
• Complete biometric verification against your CNIC
• Bring your original CNIC and payment confirmation

Step 7: Create PSW Account Credentials

• Upon successful biometric verification, you’ll receive an email link
• Use the link to set your PSW Login ID and Password
• Your profile is now active, and you can begin filing for import/export permissions

TDAP Registration (Optional but Recommended)

While PSW is the official digital platform, many exporters also register with the Trade Development Authority of Pakistan (TDAP) for additional certifications, particularly for export incentives.
To register with TDAP:

  1. Fill out the TDAP registration form

  2. Attach NTN, STRN, and business profile

  3. Pay applicable fees

  4. Await approval and obtain TDAP Certificate

Post-Registration Use of PSW

After registration, users can access various features including:
• Filing goods declarations and bill of entry
• Submitting import/export permits
• Applying for certificates and licenses (e.g., food, pharmaceuticals, etc.)
• Monitoring real-time shipment tracking
• Accessing valuation rulings and tariff codes

The PSW also integrates with WeBOC, banks, ports, and regulatory bodies such as:
• Pakistan Customs
• State Bank of Pakistan
• Ministry of Commerce
• Drug Regulatory Authority of Pakistan (DRAP)
• Animal Quarantine, Fisheries, and Plant Protection departments

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WHAT IS CUSTOM DUTY FOR IMPORTS IN PAKISTAN?

by FBRTax

Custom duty in Pakistan is a form of indirect tax levied on goods imported into the country. It is regulated by the Federal Board of Revenue (FBR) under the provisions of the Pakistan Customs Act, 1969 and is enforced through the Pakistan Customs Tariff (PCT). The main objective of custom duty is to generate revenue, protect domestic industries, encourage local manufacturing, and control the flow of goods into the country.

As of 2025, Pakistan’s custom duty framework continues to evolve based on international trade agreements, local economic needs, and budgetary goals. Here is an updated overview of the structure, types, and applicability of custom duties on imports.

Purpose of Custom Duty in Pakistan

  • Revenue Generation: A significant source of government revenue.

  • Trade Regulation: Helps control the quantity and quality of imports.

  • Domestic Protection: Shields local industries from excessive foreign competition.

  • Balance of Payments Control: Reduces trade deficits by discouraging excessive imports.

Types of Custom Duties on Imports in Pakistan (2025)

  1. Basic Customs Duty (BCD):

    • This is the standard import duty applicable on almost all goods.

    • Rates typically range from 0% to 35%, depending on the nature of goods and their HS (Harmonized System) code.

    • Specified in the First Schedule of the Pakistan Customs Tariff (PCT).

  2. Additional Customs Duty (ACD):

    • Imposed under Section 18(3) of the Customs Act.

    • Usually applied on top of the BCD for selected items, especially luxury or non-essential imports.

    • The standard rate ranges from 2% to 7%, although certain items may be subject to higher rates.

    • Notified through Statutory Regulatory Orders (SROs) and budgetary laws.

  3. Regulatory Duty (RD):

    • Levied to control the import of specific goods, especially to discourage non-essential or harmful imports.

    • Frequently used as a policy tool to stabilize foreign exchange reserves.

    • RD can range from 5% to 100% depending on the product type.

    • Applied via SROs issued by the FBR and revised periodically.

  4. Sales Tax on Imports:

    • Standard 18% Sales Tax applies to most imported goods.

    • Collected at the import stage under the Sales Tax Act, 1990.

    • Exemptions or reduced rates may apply for essential items, raw materials, and PCT-based incentives.

  5. Federal Excise Duty (FED):

    • Applied on specific categories of goods such as tobacco products, beverages, motor vehicles, and luxury goods.

    • Varies depending on product type – can be a percentage or fixed amount per unit.

    • Also applicable on selected imported services.

  6. Customs Valuation Duty:

    • Duties are calculated based on the assessable value of goods, which is determined under the Valuation Rules, 2000 using:
      • Transaction value method
      • Identical/similar goods method
      • Deductive or computed value method

  7. Advance Income Tax on Imports:

    • Collected at import stage under Section 148 of the Income Tax Ordinance, 2001.

    • Treated as advance tax adjustable against the taxpayer’s annual income tax liability.

    • Rates vary based on the importer’s status (ATL vs. Non-ATL) and product category.

Key Influencing Factors for Custom Duties

• Nature and HS Code of Goods:

  • Each product is assigned a tariff code that determines applicable rates.

• Trade Agreements and FTAs:

  • Pakistan’s Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with countries like China, Malaysia, Sri Lanka, and members of SAFTA provide concessional or zero-duty access to specific goods.

• Importer’s Profile:

  • Active Taxpayers (on the ATL) enjoy lower rates for Advance Income Tax and sometimes preferential treatment.

• Government Budget and SROs:

  • Duties and exemptions are frequently revised through annual Finance Acts and SROs, so businesses must stay updated.

How to Check Applicable Custom Duty?

Importers can verify applicable duties using the following tools:

  • Pakistan Customs Tariff (PCT) available on www.fbr.gov.pk

  • WeBOC Portal (Web-Based One Customs) for automated import declarations

  • FBR Valuation Rulings for updated price assessments

  • SROs (Statutory Regulatory Orders) for special exemptions and duties

Penalties and Non-Compliance

Failure to comply with customs regulations may result in:

  • Confiscation of goods

  • Heavy penalties or fines

  • Suspension of WeBOC access

  • Blacklisting from import activities

WHAT IS THE TAX ON ELECTRIC VEHICLES(EV) IN PAKISTAN?

by Tax

The adoption of Electric Vehicles (EVs) in Pakistan has seen a steady rise, supported by government policies offering tax exemptions and incentives under the Electric Vehicle Policy 2020–2025. As of 2025, Pakistan’s tax structure on EVs varies based on the type of vehicle, import or local manufacturing status, and battery specifications.

This guide provides a comprehensive update on the current taxes applicable to EVs, their exemptions, and benefits offered to buyers and manufacturers.

Types of Electric Vehicles in Pakistan

Electric vehicles are categorized into three main types:

  1. Battery Electric Vehicles (BEVs):

    • Fully electric vehicles that operate solely on electricity stored in batteries.

    • No internal combustion engine involved.

  2. Plug-in Hybrid Electric Vehicles (PHEVs):

    • Equipped with both an electric motor and a petrol/diesel engine.

    • Can be charged via plug-in stations.

  3. Hybrid Electric Vehicles (HEVs):

    • Combine an internal combustion engine with an electric motor.

    • Batteries charge through regenerative braking, not external power.

Current Tax Structure on EVs in Pakistan (As of 2025)

The tax treatment of EVs varies between imported and locally manufactured vehicles:

1. Locally Manufactured EVs

• Sales Tax:

  • 1% sales tax on light electric vehicles (up to 150 kWh for cars, and 50 kWh for 2- and 3-wheelers)

  • Applies to passenger cars, 2-wheelers, 3-wheelers, and small commercial EVs

• Federal Excise Duty (FED):

  • 0% (exempted under the EV Policy)

• Customs Duty on Parts:

  • Only 1% import duty on EV-specific parts and assemblies

• Registration and Annual Fees:

  • Exempted for EVs in the Islamabad Capital Territory (ICT)

  • Some provinces have begun replicating these benefits

• Other Benefits:

  • Reduced electricity rates for EV charging stations

  • Access to future government subsidies and green financing

2. Imported EVs (Completely Built Units – CBUs)

• Customs Duty:

  • Exempted on import of up to 100 four-wheel electric vehicles per manufacturer (under EV Policy quota)

  • Beyond this quota, standard duty may apply as notified annually

• Sales Tax:

  • Standard 17% for most EVs

  • 1% sales tax applicable on light EVs up to 50 kWh (2- and 3-wheelers) and up to 150 kWh for 4-wheelers

• FED:

  • 0% (as per EV Policy 2020–2025)

• Import Duty on Batteries & Charging Equipment:

  • Reduced to 1%

• Registration Fee:

  • Exempted in ICT; other provinces may charge minimal or zero fee

Key Benefits from Pakistan’s Electric Vehicle Policy (2020–2025)

Pakistan’s EV Policy aims to convert 30% of all new vehicles sold to electric by 2030. Key features include:

  1. 1% Sales Tax on Locally Manufactured EVs

  2. No FED on EV Manufacturing and Sale

  3. No Customs Duty on Import of EV-Specific Plant & Machinery

  4. 1% Import Duty on Batteries and Charging Equipment

  5. 1% Import Tax on EV Spare Parts

  6. Exemption from Registration and Annual Renewal Fees in ICT

  7. Incentives for EV charging infrastructure

  8. Special green number plates for EVs

  9. 100% waiver on import duty for the first 100 CBU electric vehicles per assembler

Other Considerations

  • Hybrid Vehicles (HEVs and PHEVs) are not eligible for all EV-specific exemptions and may still be subject to standard customs duty, FED, and higher sales tax unless specified.

  • Motorcycles and Rickshaws powered by electricity are also eligible for the same tax reductions under EV Policy if registered as such.

  • Commercial Vehicles: Electric buses and trucks are part of the government’s broader green transport goals and enjoy similar exemptions.

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HOW TO REGISTER A SOFTWARE HOUSE IN PAKISTAN WITH PSEB?

by Pakistan Software Export Board (PSEB)

The Pakistan Software Export Board (PSEB) is the apex government agency under the Ministry of IT & Telecom responsible for promoting Pakistan’s IT and software industry. Registration with PSEB not only validates your business as a software export entity but also makes you eligible for tax exemptions, government incentives, capacity-building initiatives, and global visibility.

If you are planning to launch or formalize your software house in Pakistan, registering with PSEB is a critical step. Below is a fully updated guide for 2025 outlining who needs to register, how to register, and what documents are required.

Why Register with PSEB?

PSEB registration provides numerous benefits for software houses and IT companies, including:

  • Income Tax Exemption on IT/ITeS exports until 2026 (under section 65F of Income Tax Ordinance)

  • Access to PSEB certifications, international marketing support, and trade shows

  • Eligibility for PSEB-funded training, incubators, and grants

  • Access to Pakistan’s freelancer registration program for single-person software startups

  • Inclusion in PSEB’s directory of IT companies used by international buyers

Obligations After Registration

PSEB-registered software houses must comply with certain requirements:

  1. Compliance with National Laws: Including labor, tax, and intellectual property regulations

  2. Annual Fees: Payment of PSEB membership and renewal fees as notified annually

  3. Operational Reporting: Submission of business performance data and export records

  4. Quality Assurance: Ensuring high-quality standards in software development and delivery

  5. Industry Participation: Active involvement in trade shows, IT expos, and events organized by PSEB

  6. Transparency: Sharing marketing strategies and business updates with PSEB

  7. Collaborative Engagement: Participation in sector-wide activities to uplift Pakistan’s IT exports

Eligibility for PSEB Registration

You can register your business with PSEB if you fall under any of the following categories:

  • Software Development House

  • IT Services Provider (e.g., BPO, SaaS, Cloud, Cybersecurity)

  • Freelance software entrepreneur (registered business name required)

  • Exporter of software or IT-enabled services

Step-by-Step Process to Register with PSEB (2025 Updated)

Step 1: Obtain an NTN from FBR
Before anything else, your software house must register with the Federal Board of Revenue (FBR) and obtain a valid National Tax Number (NTN).

Step 2: Company Incorporation with SECP
Register your business as a Private Limited Company with the Securities and Exchange Commission of Pakistan (SECP). This is mandatory for formal corporate operations.
Documents required include:

  • Memorandum & Articles of Association

  • Certificate of Incorporation

  • CNICs of directors/shareholders

Step 3: Apply for PSEB Membership Online
Go to https://registration.pseb.org.pk and create an account. Fill out the PSEB Registration Form and upload all necessary documents (see list below).

Step 4: Submit Application and Pay Registration Fee
Upload documents, pay the registration charges, and submit the application online. PSEB reviews the application and may request additional information or schedule a virtual inspection.

Step 5: PSEB Review and Certificate Issuance
Upon approval, PSEB issues a Certificate of Registration. You will also receive access to PSEB’s dashboard for data reporting, certifications, and support programs.

Step 6: Obtain Local Trade License
Although not always enforced, it is advisable to get a trade license from the local development authority or relevant metropolitan office.

Step 7: Register with EOBI and Social Security (If Employing Staff)
If you hire employees, register with:

  • Employees Old-Age Benefits Institution (EOBI)

  • Provincial Social Security Institution
    These registrations ensure legal coverage of employee retirement and social security benefits.

List of Documents Required for PSEB Registration (2025)

Mandatory:
• Completed online registration form (with no missing fields)
• Company profile or brochure on letterhead
• Paid registration fee receipt
• CNIC copies of all directors/partners
• Business NTN certificate
• Attested SECP documents (Certificate of Incorporation, MoA, AoA)
• Attested copy of the partnership deed (if applicable)
• Partnership or firm registration certificate (if not a company)
• Latest 6-month business bank statement

Optional but Recommended:
• Visiting cards of key personnel
• Passport copies of foreign shareholders/directors
• Export contracts (if available)
• Tax returns from the previous year (if applicable)

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HOW TO REGISTER FOR SALES TAX IN FBR PAKISTAN?

by FBRIRIS 2.0Tax

Sales tax registration in Pakistan is mandatory for certain businesses and service providers under the Sales Tax Act, 1990 and is governed by the Federal Board of Revenue (FBR). It ensures that taxable persons collect, report, and deposit sales tax on goods and services. The process is now largely digitized and can be completed via the FBR IRIS portal or mobile apps like Tax Asaan.

Below is the updated and detailed guide for Sales Tax Registration in 2025, along with eligibility criteria and the complete step-by-step process.

Who Must Register for Sales Tax in Pakistan (2025 Update)?

The following categories of persons are required to register for sales tax:

  1. All Importers
    Any person or entity importing goods into Pakistan must obtain Sales Tax Registration.

  2. All Wholesalers and Distributors
    Those engaged in wholesale business or supply chains including dealers and agents are required to register.

  3. Manufacturers (Excluding Cottage Industry)
    A cottage industry is exempt if:

    • Annual turnover is less than PKR 10 million, and

    • Annual utility bills (electricity, gas, telephone) are less than PKR 800,000

  4. Retailers – Especially Tier-1 Retailers
    Tier-1 retailers are defined as:

    • A retailer operating as a unit of a national/international chain

    • A retailer operating in an air-conditioned shopping mall, plaza, or center (excluding kiosks)

    • A retailer with annual electricity bills exceeding PKR 600,000

    • Wholesaler-cum-retailer engaged in bulk imports and direct-to-consumer retail sales

  5. Service Providers under Federal or Provincial Laws
    Includes but is not limited to:

    • Hotels and Clubs

    • Caterers and Customs Agents

    • Ship Chandlers, Stevedores

    • Courier Services, Event Planners, etc.

  6. Zero-Rated Suppliers
    Persons engaged in zero-rated supplies (e.g., exporters) who want to claim refunds must register for sales tax.

  7. Persons Liable for Compulsory Registration
    A person falling under any of the above categories but failing to register voluntarily may be forcefully registered by the FBR under Rule 6(1) of Sales Tax Rules, 2006 after due inquiry.

Step-by-Step Process to Register for Sales Tax (Online – 2025)

Step 1: Visit the FBR Website
Go to https://www.fbr.gov.pk and click on the “e-Services” tab.

Step 2: Select “NTN/STRN Registration”
This section leads to the online registration portal to apply for both National Tax Number (NTN) and Sales Tax Registration Number (STRN).

Step 3: Create a User Account (if not already created)
Provide your CNIC, mobile number (registered in your name), and email address to create an account.

Step 4: Fill in the Online Application Form (Form 181)
Enter the following:

  • Business information (type, name, address)

  • Principal activity and sector

  • Ownership or tenancy details of the premises

  • Bank account details linked with the business

  • Upload scanned documents (see list below)

Step 5: Upload Required Documents (PDF Format)
• CNIC/NICOP (for individuals)
• SECP Certificate (for companies)
• Partnership deed (for AOPs/firms)
• Business address proof (rent deed or ownership document)
• Recent utility bill (not older than 3 months)
• Bank maintenance certificate or account statement

Step 6: Verification and STRN Issuance
Once FBR verifies your documents and business activity, you will be issued:
• National Tax Number (NTN)
• Sales Tax Registration Number (STRN)

These credentials are available in your IRIS profile and emailed/SMS to you upon approval.

Step 7: Start Filing Monthly Sales Tax Returns
Sales tax registered persons must file monthly returns (Form STR-7) by the 15th of every month, even if there is no taxable activity during the month.

Alternate Methods of Registration (Mobile App – 2025 Update)

Sales Tax Registration is also available via:
• IRIS Mobile App (Available on Google Play and iOS)
• Tax Asaan App – Simple interface for both salaried and business users

These apps support registration, return filing, payment tracking, and real-time alerts. Detailed instructions for using these apps are available within the apps or on FBR’s official website.

Post-Registration Compliance

Once registered, the taxpayer must:
• Display the registration certificate at the business premises
• Issue Sales Tax Invoices with proper STRN
• Maintain proper books of accounts
• Submit accurate and timely monthly sales tax returns
• Make online payments of sales tax liability before filing the return

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HOW TO REGISTER IN FBR PAKISTAN?

by FBRIRIS 2.0

Tax registration with the Federal Board of Revenue (FBR) is the first step toward compliance with Pakistan’s tax laws. As of 2025, the FBR has modernized its system by offering online registration for individual taxpayers, while Companies and Associations of Persons (AOPs) must still complete registration via offline or partially digital processes. Here is a complete, updated guide on how to register for tax in Pakistan.

Who Can Register Online via IRIS?
Only individuals (salaried persons, freelancers, sole proprietors, and property owners) can register online through FBR’s IRIS portal. Registration for AOPs and Companies is done through FBR’s tax offices and may involve interaction with the Regional Tax Office (RTO).

Pre-Requisites for Online Registration (Individuals Only)

Before starting the online process, individuals must ensure they have the following:

  1. Read the latest User Guide available on FBR’s website.

  2. Access to a computer, scanner, and stable internet connection.

  3. A mobile number registered in their own name (linked to their CNIC).

  4. A personal email address (unique and valid).

  5. Scanned PDF copies of the following documents (for upload on IRIS):
    • Certificate of personal bank account in their name
    • Proof of ownership or tenancy agreement (if business is being registered)
    • Utility bill of the business/residential premises (not older than 3 months)

Where to Register Online:
• Visit https://iris.fbr.gov.pk
• Click on “Registration for Unregistered Person”
• Complete the form and upload the documents
• You will receive a confirmation email and SMS upon approval

Step-by-Step Process for Tax Registration (For Individuals)

1. Obtain a National Tax Number (NTN):
The NTN is a unique number assigned by the FBR to identify taxpayers. It is used for filing returns, receiving tax refunds, and performing taxable transactions (like vehicle/property registration). Individuals can apply online through IRIS using their CNIC.

2. Fill Out the IRIS Registration Form:
After selecting “Registration for Unregistered Person” on the IRIS portal, the user is prompted to fill out the tax registration form (IRIS Form 181). Key fields include:
• Personal information (Name, CNIC, address, email, phone)
• Source of income (salary, business, rental, capital gains)
• Business information (if applicable)
• Employer information (for salaried persons)

3. Upload Required Documents:
Users must upload the following in PDF format:
• Scanned copy of CNIC
• Bank certificate
• Tenancy or ownership proof of business address (if applicable)
• Latest utility bill of the business address (not older than 3 months)

4. Confirmation & NTN Issuance:
Once the application is verified, FBR issues the NTN, which is also sent via email and made available on the IRIS portal. The individual is now legally registered as a taxpayer.

5. Annual Tax Filing:
After registration, the taxpayer must file annual income tax returns and, if applicable, wealth statements by the due date (usually September 30 for salaried individuals and October 31 for businesspersons).

Offline / Manual Registration (Companies and AOPs)

As of 2025, registration for Companies and AOPs is still handled manually (or semi-digitally) through designated FBR offices. The steps are as follows:

Step 1: Obtain Business Registration Documents
• SECP Incorporation Certificate (for Companies)
• Partnership Deed & Registration Certificate (for AOPs)

Step 2: Prepare Required Documents
• Business address and contact details
• Principal activity code
• Email and phone number of the principal officer
• CNIC of all directors/partners
• Ownership/tenancy documents for office/shop/factory
• Utility bill not older than 3 months

Step 3: Submit Form IR-2 Manually
Form IR-2 must be submitted at the relevant Regional Tax Office (RTO) along with required documents.

Step 4: NTN Allotment and IRIS Access
Once approved, the FBR issues an NTN and grants access to the IRIS portal, where the entity must file annual corporate income tax returns, withholding tax statements, and sales tax returns (if registered).

Important Notes:

• The FBR may reject an application if documents are incomplete or if the mobile/email provided is already registered with another NTN.
• Re-verification via OTP (One-Time Password) sent to mobile and email is part of the registration process.
• Non-filers face higher tax rates and may be blocked from key transactions such as purchasing vehicles or property.

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WHAT ARE THE REQUIREMENTS FOR TAX REGISTRATION IN PAKISTAN?

by FBRTax

Tax registration in Pakistan is a mandatory process for individuals, businesses, companies, trusts, AOPs, and even non-residents intending to carry out taxable activities within the country. The Federal Board of Revenue (FBR) has streamlined this process through its IRIS portal, allowing taxpayers to enroll electronically and obtain a National Tax Number (NTN). The requirements differ based on the category of the taxpayer. Below is the complete and updated list of requirements for Tax Year 2025.

Requirements for Tax Registration – Individuals:
An individual must ensure the following documents and information are available before initiating e-enrollment through FBR’s online system:
• CNIC (for residents), NICOP (for overseas Pakistanis), or valid Passport (for foreigners)
• Cell phone number registered in the individual’s name
• Active email address
• Nationality
• Residential address (permanent or current)
• Accounting period (normally July to June)
In case of business income:
• Business name (if applicable)
• Business address (shop/office/online business address)
• Principal business activity (as per FBR’s activity codes)
In case of salary income:
• Name and NTN of employer
• Employer’s address
In case of rental income:
• Complete address of the rented property

Requirements for Tax Registration – Companies & AOPs:
The Principal Officer (CEO, Managing Partner, or Trustee) must provide the following information:
• Legal name of company or Association of Persons (AOP)
• Registered business name (if different)
• Official business address (head office or main place of business)
• Accounting period (typically July–June)
• Business landline/contact number
• Valid email address
• Mobile number of the principal officer (must be active and registered)
• Principal business activity and sector code
• Address of industrial establishment or branch office
• Type of entity: Public Limited, Private Limited, Trust, NGO, Society, Modaraba, Small Company, etc.
• Date of incorporation/registration
Required documentation based on entity type:
• Certificate of Incorporation from SECP (for companies)
• Registration certificate & Partnership Deed (for registered firms)
• Partnership Deed (for unregistered AOPs)
• Trust Deed (for Trusts)
• Society Registration Certificate (for societies/NGOs)
• Name, CNIC/NTN of the representative handling tax matters

Additional Requirements for Directors/Shareholders in Companies & Partners in AOPs:
For each director and shareholder holding 10% or more shares in a company, or for each partner in an AOP, the following is required:
• Full name
• CNIC, NTN, or Passport number
• Percentage of shareholding or profit-sharing ratio

Requirements for Non-Resident Companies with Permanent Establishment in Pakistan:
Non-resident companies with a branch or office in Pakistan must provide the following:
• Legal name of the foreign company
• Local business address in Pakistan
• Accounting period (as per business setup)
• Local phone number of the branch or representative office
• Description of principal business activity
• Address of main place of business or industrial unit in Pakistan
• SECP registration number and incorporation date of the Pakistani branch
• Name, address, and CNIC/Passport of the Principal Officer or Authorized Representative
• Authority letter appointing the principal officer or authorized representative
• Mobile number and email address of the authorized representative

Requirements for Non-Resident Companies Without Permanent Establishment in Pakistan:
For foreign entities not having a physical presence but conducting taxable activities in Pakistan (such as digital services), the following information is required:
• Name of the company
• Foreign business address
• Names and nationalities of all directors or trustees
• Chosen accounting period
• Name and address of authorized representative in Pakistan
• Authority letter for appointment of authorized representative
• Mobile number and email address of the authorized representative
• Principal business activity (e.g., software development, digital content, consultancy)
• Foreign tax registration or incorporation certificate issued by the relevant authority in the home country

Once the relevant details are submitted and verified, the FBR issues the National Tax Number (NTN) and adds the taxpayer to the IRIS system. This enables the taxpayer to file returns, claim exemptions, generate tax certificates, and receive refunds.

Failure to register can result in penalties, non-compliance notices, or restrictions from conducting certain financial and commercial transactions.

WHAT ARE THE TYPES OF TAX PAYERS IN PAKISTAN?

by Tax

The Government of Pakistan collects taxes through the Federal Board of Revenue (FBR), which is responsible for implementing tax laws, collecting federal taxes, and regulating the national tax system. These taxes are used to fund the operations of the government, including public sector development, infrastructure, defense, education, and healthcare.

In Pakistan, different types of taxpayers are categorized based on their legal status, nature of income, and source of earnings. Each category is treated differently under the Income Tax Ordinance, 2001, and is subject to specific tax rates and compliance requirements. These classifications help the FBR ensure accurate tax collection and monitoring of economic activity. Below are the main types of taxpayers in Pakistan:

• Individual Taxpayers:
An individual taxpayer is a natural person who earns income through any legal means such as employment, business, property, capital gains, dividends, or freelancing. Income tax on individuals is applied according to progressive tax slabs ranging from 0% to 35% (as per Tax Year 2025).
Examples include:

  • Salaried employees

  • Freelancers and consultants

  • Shopkeepers and sole proprietors

  • Professionals like doctors, engineers, and lawyers
    Filing an income tax return and wealth statement is mandatory for individuals exceeding the minimum taxable threshold, which is currently PKR 600,000 per annum for salaried individuals and PKR 400,000 for business income.

• Association of Persons (AOPs):
An Association of Persons (AOP) is a group of individuals or entities formed to conduct a joint business or activity. The AOP is treated as a separate taxable entity. The income earned by the AOP is taxed according to slab rates prescribed for AOPs.
Examples include:

  • Unregistered partnerships

  • Joint ventures

  • Family businesses operating without incorporation
    Members of the AOP may also need to declare their share of profit in their personal income tax returns.

• Companies:
Companies in Pakistan are legal persons separate from their owners and shareholders. They are taxed at corporate rates based on their type and activity.
Types of companies include:

  • Private Limited Companies (PLCs)

  • Public Limited Companies

  • Single Member Companies (SMCs)

  • Not-for-profit companies registered under Section 42
    For Tax Year 2025:

  • Standard corporate tax rate is 29%

  • Banking companies pay 39%

  • Small companies (meeting certain thresholds) are taxed at 20%
    Companies must file audited financial statements along with corporate income tax returns and comply with withholding tax requirements.

• Partnership Firms:
Partnership firms are businesses jointly owned by two or more individuals who share profits and losses. In Pakistan, they are taxed as AOPs under the Income Tax Ordinance.
Types include:

  • General Partnerships

  • Limited Liability Partnerships (LLPs)

  • Limited Partnerships
    The firm files a return, and the individual partners also reflect their respective shares in their personal returns. LLPs must also be registered with the SECP.

• Non-Resident Taxpayers:
Non-resident taxpayers are individuals or entities that do not reside in Pakistan but derive income from within the country. Tax is levied only on Pakistan-source income.
Examples include:

  • Foreign companies with a permanent establishment in Pakistan

  • Individuals earning rent from Pakistani property

  • Foreigners providing digital or technical services

  • Non-residents investing in Pakistani stock markets
    Withholding tax is often the main collection method. If a Double Taxation Treaty (DTT) exists between Pakistan and the taxpayer’s country, tax credits or reduced rates may apply.

• Trusts:
A trust is a legal arrangement in which a person (trustee) holds property or income for the benefit of another (beneficiary). Trusts can be taxed as separate entities based on the income they generate.
Types of trusts:

  • Charitable trusts (may get exemptions under Section 100C if conditions are met)

  • Private/family trusts

  • Religious trusts
    If not exempt, income is taxed at slab rates applicable to AOPs or under special provisions.

• Clubs, Societies, and Other Similar Organizations:
These are non-profit associations formed for social, cultural, recreational, or professional purposes. If these organizations earn any income from subscriptions, investments, or services, they may be subject to taxation.
Examples include:

  • Sports clubs

  • Cultural societies

  • NGOs with partial commercial operations
    Such entities must file annual tax returns. They can also apply for tax exemption if they fulfill the relevant requirements under tax laws and SECP regulations.

Benefits of Being on the Active Taxpayers List (ATL):
Taxpayers whose names appear on the FBR’s Active Taxpayers List enjoy the following advantages:

• Lower tax deduction on bank profits and cash withdrawals
• Reduced withholding tax on registration and transfer of vehicles
• Lower advance tax rates on property transactions
• Reduced capital gains tax on sale of securities
• Lower withholding tax on dividends and prize bond winnings
• Eligibility for refunds of excess tax paid
• Preference in government contracts and tenders
• Avoidance of higher penalties and enforcement actions

To remain on the ATL, timely filing of income tax returns is mandatory. The ATL is updated weekly and publicly available on the FBR website.

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WHAT ARE THE TYPES OF TAXES IN PAKISTAN?

by FBRIRIS 2.0Tax

Domestic Taxes, comprising Income Tax, Sales Tax, and Federal Excise Duty, constitute about 90% of the revenue collected by the Federal Board of Revenue (FBR). These taxes are not only similar in essence but are also interdependent in practice. Below are key taxes collected by the Government of Pakistan, including updates based on the latest tax regulations and budget announcements for the fiscal year 2024–25:

• Income Tax: Income tax is imposed on individuals, associations of persons (AOPs), and companies based on their income level. For the tax year 2025, individual tax rates range from 0% to 35%, and corporate tax rates vary between 29% and 39%, depending on business structure and industry. All taxpayers are required to file income tax returns and, where applicable, wealth statements annually.

• Sales Tax: Sales tax is levied on the supply of goods at a federal level and on services at the provincial level. The standard federal sales tax rate is now 18%, as increased in the 2024 Finance Act. Provincial sales tax rates on services vary from 13% to 16% depending on the province.

• Federal Excise Duty (FED): This duty is imposed on certain goods (like cigarettes, beverages, cement, and petroleum products) and services (e.g., air travel and telecom). Rates are product-specific. For example, FED on sugary drinks is now 20%, and on tobacco products it exceeds 30%.

• Customs Duty: Customs duty applies to imported goods under the Customs Act, 1969. Rates can range from 0% to 50% based on the nature, classification, and origin of the goods. Goods from countries under Free Trade Agreements (like China) may be exempted or have reduced duty.

• Agricultural Income Tax: This is a provincial tax on income from agricultural land. It is levied at rates typically ranging from 5% to 10%, depending on the size of landholding and income level. Agricultural income is exempt from federal income tax only if documented per provincial laws.

• Withholding Tax: WHT is deducted at the source on transactions such as contracts, dividends, salaries, and banking transactions. For example, dividend WHT is 15% for Active Taxpayers and 30% for non-ATL persons. It is the largest contributor to direct tax collection in Pakistan.

• Property Tax: Property tax is levied by provincial governments based on the annual rental value or area of a property. Rates vary significantly between urban and rural areas and by province. For instance, in Punjab, the property tax ranges from 5% to 20% of the annual rental value.

• Capital Value Tax (CVT): CVT is imposed by the federal government at 1% of the fair market value of property located in urban areas, applicable on transactions above PKR 50 million. Some provincial governments also levy their own CVT on immovable property.

• Token Tax: Token tax is charged on motor vehicles either annually or at the time of registration. The rate depends on engine capacity, vehicle type (private/commercial), and whether the vehicle is locally assembled or imported. Hybrid/electric vehicles may have reduced token tax.

• Professional Tax: This is a provincial tax levied annually on salaried professionals and self-employed individuals such as doctors, lawyers, consultants, and contractors. The tax amount ranges from PKR 500 to PKR 100,000, depending on income level and profession type.

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WHAT IS TAX(PAKISTAN)?

by FBRTax

In Pakistan, tax is a compulsory financial charge or levy imposed by the government on individuals, businesses, and other entities to fund public services, infrastructure, defense, and other state functions. Taxes are governed primarily under the Income Tax Ordinance, 2001, Sales Tax Act, 1990, and Federal Excise Act, 2005, among others.

There are two main types of taxes in Pakistan: Direct Taxes and Indirect Taxes.

Types of Taxes in Pakistan

1. Direct Taxes
Direct taxes are levied directly on individuals and organizations based on income or wealth. The major types include:
• Income Tax – charged on income earned by individuals, companies, and AOPs.
• Capital Gains Tax (CGT) – applicable on the sale of securities, property, or other capital assets.
• Withholding Tax – deducted at source on payments like salaries, contracts, rent, dividends, etc.

2. Indirect Taxes
Indirect taxes are collected through the sale of goods and services and passed on to the government by intermediaries (e.g., sellers or service providers). These include:
• Sales Tax – generally 18%, levied on the sale and import of goods and services.
• Federal Excise Duty (FED) – imposed on specific goods (e.g., tobacco, beverages) and services.
• Customs Duty – charged on imported goods at various rates.

Who Collects Taxes in Pakistan

Tax collection is managed by the Federal Board of Revenue (FBR) at the federal level. Additionally, each province has its own revenue authority:
• Punjab Revenue Authority (PRA)
• Sindh Revenue Board (SRB)
• Khyber Pakhtunkhwa Revenue Authority (KPRA)
• Balochistan Revenue Authority (BRA)

Importance of Paying Taxes

Paying taxes is a civic duty and essential for national development. It enables the government to:
• Build infrastructure (roads, schools, hospitals)
• Fund defense and law enforcement
• Support education, health, and welfare programs
• Maintain economic stability

Common Taxpayer Categories in Pakistan

• Salaried Individuals
• Business Individuals
• Companies (Private/Public Ltd.)
• AOPs (Associations of Persons)
• Non-Resident Pakistanis (on certain incomes)

Filing and Compliance

Individuals and businesses must file annual Income Tax Returns and Wealth Statements (where applicable) through the FBR’s IRIS Portal. Failure to do so can result in fines, penalties, and loss of filer status.

Filer vs. Non-Filer:
Filer status gives taxpayers benefits like lower withholding tax rates, eligibility for government tenders, and other financial advantages.

Conclusion

Taxation in Pakistan is structured to ensure equitable distribution of wealth and to generate revenue for national development. By becoming a tax filer and staying compliant, individuals and businesses contribute to the country’s progress while enjoying legal and financial benefits.