President Asif Ali Zardari has enacted the Income Tax (Amendment) Ordinance 2024 on 28 December, which establishes new corporate tax rates for banks. Under the ordinance, banks will face a 44% tax rate for the 2025 tax year (from 39%), gradually decreasing to 43% in 2026 and 42% in 2027 and beyond.
For small enterprises, the tax rate is maintained at 20%, whereas for all other businesses, it is set at 29%.
From 2025 onwards, banks will be taxed on profits and gains under Division-II of Part-I of the First Schedule, with the gross advances-to-deposit ratio no longer influencing their tax liabilities. Additionally, the ordinance also modifies how banks calculate their gross advances-to-deposit ratios – they are now required to use values of gross advances and deposits disclosed in the annual audits.
The Federal Board of Revenue (FBR) anticipates raising PKR 70 billion from the banking sector by 31 December 2024, aimed at addressing the revenue shortfall for the current fiscal year.
