Company income tax, with the minimum turnover tax check.
Tax payable
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Normal tax
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Minimum turnover tax
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Your breakdown
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Pakistan taxes companies on whichever number is higher
Company income tax in Pakistan is not simply a percentage of profit. The Federal Board of Revenue (FBR) runs a two-test system: it works out your normal tax on taxable profit, then a minimum tax on turnover, and you pay the larger of the two. This protects revenue from companies that report tiny profits on large sales. Understanding that "higher of" rule is the single most important thing this calculator teaches, because it is what trips up founders who budget only for the rate on profit.
The percentages themselves move with each Finance Act, so treat the figures below as the ones this calculator currently applies and confirm the live position for your tax year with the FBR before you file. The mechanism, the higher of two tests, has been stable for years and is safe to plan around.
Which rate band fits your company
The rate on profit depends on how the company is classified. As modelled here, a standard company pays 29%, a small company pays 20%, and a banking company pays 39%. The reduced small-company rate is a genuine break, but the qualifying conditions on capital, employees, and turnover are strict, so do not assume it without checking. Running the alternative is worth a few minutes: a borderline business that just misses small-company status jumps from 20% to 29%, a meaningful difference on real profit.
The minimum turnover tax, and when it wins
Separately, a minimum tax of 1.25% of turnover applies under section 113 at the rate this calculator uses. For a healthy, profitable company the normal tax is far higher and the minimum never bites. For a thin-margin or loss-making company it becomes the floor. Picture a standard company turning over PKR 200 million but earning only PKR 5 million of profit. Normal tax at 29% is PKR 1.45 million, but the minimum tax of 1.25% on PKR 200 million is PKR 2.5 million, so the company pays PKR 2.5 million. The effective rate on its profit lands at a painful 50%.
The chart sets the two tests side by side. The minimum tax bar is taller, so it is the one that applies. Flip the inputs toward higher profit and the bars swap, which is the moment the normal rate takes over.
What this calculator leaves out
This tool gives you the corporate income tax line only. It does not add super tax, which is a separate charge on higher company incomes, nor the Workers' Welfare Fund or Workers' Profit Participation Fund that industrial undertakings carry. If you want the full company bill stacked together, use the company total tax calculator instead. Keeping this page focused on the higher-of mechanic is deliberate, because that is the rule most worth getting right first.
Use the result for budgeting and advance-tax planning, then have your filed return prepared by a professional who can confirm classification, current rates, and the minimum-tax adjustments that can carry forward.
Can the minimum turnover tax I pay be recovered later?
In broad terms the excess of minimum tax over normal tax can often be carried forward and set against normal tax in later years, within a limited window, when the company returns to healthy profit. The rules and the carry-forward period are set by the FBR and change, so confirm the current treatment before relying on it. This calculator shows only the tax due in the year you model.
Does a company with zero profit still pay tax?
Usually yes. A company with no profit, or even a loss, still falls under the minimum turnover tax on its sales. That is the design intent of section 113. Enter a profit of zero with real turnover in the tool and you will see the minimum tax become the entire liability.