How vat / sales tax works in Pakistan
Pakistan sales tax defaults to 18% on goods and services under the 1990 Act as updated, with reduced and zero bands on defined essentials.
Traders register past turnover tests, file monthly electronic returns, and run FBR-integrated e-invoicing that validates every transaction.
Exports zero-rate, provincial services follow separate regimes, and cross-border digital supplies face collection rules.
Tax rates at a glance
- Standard VAT
- 18%
- Reduced bands
- Lower / 0%
- Exports
- 0%
- Provincial services
- Separate
- Registration line
- Turnover test
- Filing rhythm
- Monthly
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersManufacturersFreelancersExpatsCross-border traders
Watch out for
- Federal-provincial split means goods and services follow different administrations, with 15-16% provincial service rates beside 18% federal.
- FBR-integrated e-invoicing gates credits: non-transmitted invoices undermine buyer claims regardless of the underlying supply.
- Withholding-style collection on defined transactions redirects remittance to counterparties, changing cash-flow modelling.
- 2025-26 Act updates move thresholds and mechanics yearly, so prior-year parameters mislead systematically.
Frequently asked questions
What is the sales tax rate in Pakistan?
Pakistan applies 18% standard sales tax in 2026 on goods and services, with reduced and zero bands and separate provincial service regimes.
How do provincial service taxes work?
Provinces administer services separately at typically 15% to 16%, so federal goods and provincial services follow different returns and rules.
How often are Pakistani sales-tax returns filed?
Monthly through electronic returns backed by FBR-integrated e-invoicing that validates every transaction.