Pakistani sales tax rates and sales tax compliance

Sales tax rates in Pakistan

The standard sales tax rate in Pakistan is 17%.

Exporters and certain providers of financial services may apply for a Sales Tax suspension. Imports of some basic foodstuffs and agricultural supplies are exempt from import Sales Tax.

Calculated at 20% of the sales tax withholding regime, there is an anti-fraud measure which may be applied for certain customers – generally public authorities paying their customers. The same is applicable for advertising services, including for non-resident suppliers. In these cases, the taxpayer must be a registered Withholding Agent.

The other current rates are:

Pakistan sales tax rates

Rate

Supplies

17% Goods: supplies of goods, including imports. There is an additional 1% levied where the customer is a non-Sales Tax registered consumer.
16%, 15% and 13% Services: banking; construction; shipping; telecoms (17%); advertising; specialist advice and consulting; outsourced businesses services; event organisation and related services; temp or contract employees; hotel and restaurants.
10%, 8%, 5%, 3% Local imports and produce for export. Sugar. Certain plant and machinery.
18.5% to 25% Various other specific supplies, including metals, chemicals and petroleum products
0% Exports; office stationery 
Exempt Pharmaceuticals; books and newspapers; agriculture produce; medical supplies

Pakistani sales tax compliance

Pakistani sales tax registered businesses must produce a tax invoice. Simplified invoices are permitted for retail sales. Invoices should include the following details:

  • Name, address of the supplier
  • Tax number of the supplier
  • Name, address of the customer
  • Date of supply
  • Unique invoice number
  • Description of the goods or services provided
  • Sales tax rate, amount charged and gross amount of the invoice
  • Foreign currency amount must be translated into PKR at a public exchange rate.

Time of supply rules in Pakistan

Sales tax becomes due at the time of supply. For services, this is generally the earlier of when the taxable supply is provided, or payment made. For goods, it is generally the point when the invoice is settled with a payment.

Tax on imports is due at the time of customs clearance into Pakistan.