Standard Corporate Tax Rates 2025–26

Company TypeTax Rate
Public/Private Limited Company29%
Small Company (as defined under Income Tax Ordinance)20%
Banking Company39%
Modaraba25%

Small company definition: A company qualifies as a "small company" if it has paid-up capital plus undistributed reserves not exceeding the prescribed limit, employs no more than 250 employees, has turnover not exceeding Rs. 250 million, and is not formed by splitting an existing larger business.

Super Tax (Section 4C) — Tiered Rates

Income SlabSuper Tax Rate
Up to Rs. 150 million0%
Rs. 150M – 200M1%
Rs. 200M – 250M2%
Rs. 250M – 300M3%
Rs. 300M – 350M4%
Rs. 350M – 400M6%
Rs. 400M – 500M8%
Above Rs. 500 million10%

Super tax is applied in addition to standard corporate tax and is calculated on total income above the threshold — it primarily impacts large, highly profitable companies and certain specified sectors.

Minimum Turnover Tax (Section 113)

Even if a company reports a loss or very low taxable profit, it must pay a minimum tax of 1.25% of turnover in most cases (rates vary by sector — e.g., distributors of certain goods may have lower minimum tax rates). This ensures companies with high revenue but manipulated low declared profit still contribute a baseline tax.

Worked example: A company with Rs. 50 million annual turnover but only Rs. 2 million declared profit would normally owe ~Rs. 580,000 at 29%. But minimum tax of 1.25% × Rs. 50M = Rs. 625,000 applies instead, since it's higher.

Available Tax Credits for Companies

  • Tax credit for investment in plant & machinery (subject to conditions)
  • Tax credit for enlistment on a stock exchange
  • Tax credit for charitable donations to approved institutions
  • Group relief/group taxation benefits for qualifying corporate groups

Frequently Asked Questions

What is the difference between a small company and a regular Pvt Ltd for tax purposes?
A small company benefits from a reduced 20% tax rate instead of the standard 29%, provided it meets the criteria on capital, employee count, and turnover, and is newly incorporated (not a split of an existing business) for the relevant years specified in the law.
Does super tax apply to all companies?
Super tax applies to companies with income above Rs. 150 million, with rates increasing in tiers up to 10% for income above Rs. 500 million. Companies below this threshold are not subject to super tax.
Can minimum turnover tax be carried forward or adjusted?
Yes, the excess of minimum tax paid over the actual tax liability can be carried forward for adjustment against tax liability in subsequent tax years, subject to the time limits specified in the Income Tax Ordinance.

Need Corporate Tax Planning?

We help companies optimize tax liability, plan for super tax, and ensure accurate minimum tax computation.