For tax purpose Income Tax Ordinance, 2001 makes two categories of companies,
i.e. small companies and companies which are not small companies.
Small company is neither a generic term nor a general phrase, the term is used in tax law only for imposition of lower tax on companies which has turnover / sales of less than 250 million ( 25 Crore), less than 250 employees and paid up capital (paid up capital plus retained earnings) of less than 50 million ( 5 Crore).
Income Tax Ordinance, 2001 defines in the following words:
―Small Company‖ means a company registered on or after the first day of July, 2005, under the Companies Ordinance, 1984 (XLVII) of
(i)has paid up capital plus undistributed reserves not
exceeding [fifty] million rupees;
(ia)has employees not exceeding two hundred and fifty any time during the year
(ii) has annual turnover not exceeding two hundred 2 [and fifty] million rupees
(iii) is not formed by the splitting up or the reconstitution of company already in existence
Corporate Tax Rate
For many year corporate tax rate had been 35%, which was very high
In Pakistan for tax year 2017 and 2018 the corporate tax rate is 30% of the income of company .
The rate of tax imposed on taxable income of a company, other than banking company shall be 32% for the tax year
2016, 31% for tax year 2017and 30% for tax year 2018 and onwards