Oct 28, 2018 2 min read

Pakistan Payroll Outsourcing Alert

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
800,0011,200,000 2,000
1,200,001 2,500,000 5% of the amount exceeding PKR 1,200,000.00
2,500,001 4,000,000 PKR 65,000 plus 10% of the amount exceeding PKR 2,500,000.00
4,000,001 8,000,000 PKR 290,000 plus 20% of the amount exceeding PKR 4,000,000.00
8,000,001 AbovePKR 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://mercans.com/.

 

 

Most viewed posts

View all posts

Client Success Story: Cochlear

360°solution with a greenfield experience with a full stack of services including HR, finance, accounting, payroll, back office setup, and reporting.

May 25, 2023 3 min read

Turkey Introduces New Social Security Law Number

Turkey has introduced the procedures and principles of the 5-point SSI premium incentive for employees who have opted for early retirement within the scope of Emeklilikte yaşa takılanlar (EYT).

May 22, 2023 1 min read

Unleashing the Power of Payroll Data Analytics

Thorough analysis of payroll data empowers businesses to extract valuable insights, enhancing customer and employee experiences and driving exceptional business outcomes.

May 18, 2023 4 min read

Kenya Changes National Social Security Fund Act

The total contributions for both employee and employer are Kshs 2,160 per month. Self-employed individuals who are members of the fund may proceed contributing the flat rate of Kshs 200 per month, which is the minimum amount of voluntary contribution

May 15, 2023 2 min read

Lebanon renews Transportation, Schooling, Cost of Living Expenses a...

Lebanese government has increased the minimum wages to LBP 9,000,000 from LBP 2,600,000 earlier and the minimum daily wage now stands at LBP 410,000.

May 10, 2023 1 min read

Ghana Amends Income Tax Rates For Residents

Effective from 1st May, the annual and monthly income tax bands and rates are applicable to the chargeable income of resident individuals.

May 9, 2023 1 min read