Withholding Tax7 min read•January 10, 2025

2025 Withholding Tax Rates in Pakistan: What Contractors Need to Know

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By Muhammad Azeem
40+ Years Tax Experience
Expert-Verified Content
This article has been reviewed by Muhammad Azeem, Pakistan's leading tax consultant with 40+ years of experience.

2025 Withholding Tax Rates in Pakistan: What Contractors Need to Know

Understanding Withholding Tax in Pakistan

Withholding tax is an income tax paid by the payer of income rather than the recipient. In Pakistan, it applies to various payments, including salaries, dividends, and contractor payments.

Why Withholding Tax Matters for Contractors

Withholding tax serves two primary purposes:

  • Revenue Collection
  • Tax Compliance

    • Latest Withholding Tax Rates for Contractors in 2025

    Contractor Services

    Withholding tax rates vary based on contractor residency:

  • **Resident Contractors**: 10% to 12%
  • **Non-Resident Contractors**: 15% to 20%

    • Withholding Tax on Rental Income

    Rental Income Tax Rates

  • **Individual Landlords**: 5% to 10%
  • **Corporate Landlords**: 15%

    • Withholding Tax on Dividends

    Dividend Income

  • **Resident Individuals**: Around 15%
  • **Non-Resident Individuals and Corporations**: 20% to 25%

    • Actionable Advice for Contractors

  • Stay informed about tax law updates
  • Maintain accurate records
  • Utilize tax treaties
  • Plan for tax payments

    • Conclusion

    Understanding withholding tax rates is crucial for contractors in Pakistan. Staying informed and proactive can help optimize financial planning and ensure compliance.

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    Comments (1)

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    Regular Useron 2025-01-16

    This is very helpful information about FBR audit triggers. Thanks for sharing!

    Blog Manageron 2025-01-16

    I agree! This will help me prepare better for potential audits.

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