Thousands of Companies Skipping Taxes in Pakistan

November 20, 2017 Taxation in Pakistan

Pakistan taxesISLAMABAD – While Pakistan’s biggest companies are paying a significant portion of all taxes, thousands of small companies are skipping all of their obligations.

According to information in Pakistan’s recently published Tax Directory 2016, approximately 40 percent of companies in Pakistan did not pay any taxes despite filing tax returns.

In total, 79 700 tax returns were filed by companies and partnerships, with 31 364 companies, and the remainder being made up by partnerships.

The Tax Directory shows that of the businesses that did file returns, approximately 33 000 did not pay any taxes at all.

However, it is noted that the non-payment is an indicator of poor compliance, as the tax rules in Pakistan state that businesses that make a loss must still pay a tax of 1 percent, if they see a turnover of PKR 10 million or more.

Along with the businesses which did file tax returns but skipped out on taxes, thousands of more business simply didn’t file taxes returns at all.

However, while a significant portion of businesses skipped out on their taxes, it was also shown that over half of all income tax from business came from the largest 50 companies in the country.