What is Withholding Tax (WHT) under Pakistan tax law?

Withholding Tax (WHT) is a tax deduction collected at source by designated withholding agents (including all SECP registered companies) when making payments for goods, services, office rent, contracts, and dividends.

What is Section 153 of the Income Tax Ordinance 2001?

Section 153 governs withholding tax on payments made for supply of goods, rendering of services, and execution of contracts. Companies must deduct WHT at applicable rates (e.g. 3% to 11% for services) depending on the vendor's Active Taxpayer List (ATL) status.

What is Section 152 of the Income Tax Ordinance 2001?

Section 152 governs withholding tax on payments made to non-residents (foreign companies or offshore software vendors). Unless covered under a Double Taxation Treaty or Exemption Certificate, payments to non-residents attract 15% to 20% withholding tax.

How often must companies file withholding tax statements on FBR Iris?

Under Section 165, all companies must file quarterly Withholding Tax Statements (Form 165) on FBR Iris detailing tax deducted from vendors, employees, and landlords.

What is the penalty for failing to deduct or deposit Withholding Tax?

Failing to deduct or deposit WHT makes the company personally liable to pay the un-deducted tax plus a 12% per annum default surcharge interest under Section 161, and disallows the underlying expense from corporate tax deductions under Section 21(c).

Blog/Pakistan Corporate Setup

Withholding Tax (WHT) Rates & Filings in Pakistan for Companies (Section 153/152)

A comprehensive withholding tax compliance guide for corporate finance leads and business owners on FBR WHT rates under Section 153, foreign payments under Section 152, quarterly Form 165 statements, and CPR deposit receipts.

ADVAQ Corporate Tax Team

8 Min Read · Published July 2026

Income Tax Ordinance Ordinance 2001 Section 153/152

WHT Corporate Mandate

•Withholding Agent Status: Every SECP Private Limited company is legally designated as a Withholding Agent.
•Section 153 (Local Payments): Deduct WHT on vendor payments for goods, services, and contracts (rates differ for Filers vs Non-Filers).
•Section 152 (Foreign Payments): Deduct WHT on offshore software licenses and foreign consultant fees.
•Quarterly Form 165 Filings: Submit withholding tax statements on FBR Iris every 3 months.

1. The Role of SECP Companies as Statutory Withholding Agents
2. Section 153 WHT Rates (Goods, Services, Contracts)
3. Section 152 WHT on Payments to Foreign Companies
4. Submitting Quarterly Withholding Tax Statements (Form 165)
5. Avoiding Expense Disallowance under Section 21(c)
6. Frequently Asked Questions

1. The Role of SECP Companies as Statutory Withholding Agents

Under Section 153 of the Income Tax Ordinance 2001, all SECP registered companies automatically act as Withholding Tax Agents for the Federal Board of Revenue.

When making payments to suppliers, contractors, landlords, or employees, companies must deduct the statutory tax percentage and deposit it into the Federal Treasury via Computerized Payment Receipt (CPR) within 7 days.

2. Section 153 WHT Rates (Goods, Services, Contracts)

Standard Section 153 WHT rates for active tax filers include:

Supply of Goods: 4% to 5%
Services (General): 8% to 11%
Specified IT / Software Services: 3% (reduced rate for certified IT services)
Execution of Contracts: 7% to 8%

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3. Section 152 WHT on Payments to Foreign Companies

When a Pakistani company pays foreign offshore vendors for cloud software, international consulting, or digital services under Section 152, WHT must be withheld unless an official SBP or FBR Double Tax Treaty Exemption Certificate is held.

4. Submitting Quarterly Withholding Tax Statements (Form 165)

Under Section 165, companies file electronic withholding tax statements on FBR Iris 2.0 every quarter (Q1: Oct 20, Q2: Jan 20, Q3: Apr 20, Q4: Jul 20).

5. Avoiding Expense Disallowance under Section 21(c)

Failing to deduct or deposit WHT on vendor invoices causes FBR to disallow the entire underlying expense under Section 21(c), artificially increasing your corporate taxable income.

Frequently Asked Questions

PAKISTAN CORPORATE WHT SOLUTIONS

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Section 153 & 152 WHT calculation, CPR payment generation, quarterly Form 165 Iris filings, and Section 161 audit defense.

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