Global Payroll Outsourcing Provider Issues Statutory Change Alert for Pakistan

Pakistan introduces a new tax bracket – companies are required to retroactively recalculate and declare income tax applied since July 1, 2018.

On September 18, 2018, the Ministry of Finance for Pakistan introduced Finance (Amendment) Bill 2018/2019, which amended the previously announced tax year 2019 personal income tax rates and brackets. In accordance to the new bill, the following tax brackets apply to the salaries paid during July 1, 2018 to June 30, 2019 to Pakistani tax residents:

 

Annual Income (in PKR) 
FromToTax Rate/Minimum Tax Amount in PKR*
1400,0000%
400,001800,0001,000
800,0011,200,0002,000
1,200,0012,500,0005% of the amount exceeding PKR 1,200,000.00
2,500,0014,000,000PKR 65,000 plus 10% of the amount exceeding PKR 2,500,000.00
4,000,0018,000,000PKR 290,000 plus 20% of the amount exceeding PKR 4,000,000.00
8,000,001AbovePKR 1,090,000 plus 25% of the amount exceeding PKR 8,000,000.00

*Respective minimum tax amounts are applied to all taxpayers with annual taxable income between 400,000 and 1,200,000. For example, if the annual taxable income of an employee exceeds PKR 800,000 but is less than PKR 1,200,000 then the total annual income tax liability of the taxpayer is PKR 2,000.

Total annual net income should be rounded to the nearest Pakistani Rupee for the income tax calculation purposes.

The revised income tax brackets are applicable to all taxable employment income earned after July 1, 2018 and before June 30, 2019. Therefore, the employers are required to retroactively apply the revised rates and brackets on all compensation already paid and declared since the beginning of the current tax year; i.e. from July 1, 2018.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above changes.

For additional information please visit https://www.mercans.com/.

About Mercans:

Mercans is a fully integrated global payroll, PEO and HR services provider. This means that as our client you get access to our cutting-edge global payroll software, local in-country payroll, compliance and HR specialists, and tax and HR advisory service entirely without having to deal with the complexities of setting up local legal entities or in-house payrolls.

If you are tired of dealing with the payroll industry dinosaurs and their outdated and inflexible technology, or with aggregators who simply pass on your data to their subcontractors and divert your calls to an off-shore call center and never seem to have the local knowledge, Mercans is your ideal partner.

Mercans accepts your payroll data, configures calculation rules and generates reports based on your needs and requirements. You will never again have to go through lengthy implementation processes only to find out that you need to change your own side to cope with the limitations of the payroll provider. Our software platform has preconfigured API integration capability with all the major global HRMS platforms, including SuccessFactors, Workday, Oracle HCM, MS Dynamics, and so on.

Our in-country payroll and PEO specialists support you locally when and where you need them. We provide you with practical guidance regarding payroll compliance issues as well as immigration and HR. Never again will you be left hanging, waiting for an answer from a call center. We take care of your business when and where you need it.

Our single contract and software platform approach guarantees that you have the full overview of all of your local payrolls and related costs. You can view and analyze the payroll data in real time and without building expensive reports or data interfaces.

All of Mercans’ systems and processes are GDPR compliant and ISO 9001, 20000 and 27001 certified.

Mercans is also the member of Global Payroll Association https://globalpayrollassociation.com/