Pakistan’s dividend tax collection rises 21% despite Jan slump

Pakistan’s tax authority reported a 21% increase in income tax collection from dividends during the first seven months of the current fiscal year, despite a sharp decline in receipts in January.

Provisional data released by the Federal Board of Revenue showed that income tax revenue from dividends reached PKR 116.31 billion between July 2025 and January 2026, compared with PKR 96 billion in the same period of the previous fiscal year.

However, collections fell 28% in January this year to PKR 3.92 billion, down from PKR 5.46 billion in January 2025.

Under Section 150 of the Income Tax Ordinance, 2001, tax is deducted at source on dividend payments at varying rates depending on the type of dividend and whether the recipient is listed on the Active Taxpayers List (ATL). Non-ATL taxpayers are subject to rates that are double the standard rates.

According to the FBR, key rates include 7.5% on dividends paid by independent power producers reimbursed by CPPA-G, and 15% on dividends from real estate investment trusts and most other cases.

For mutual funds, rates stand at 25% or 15%, depending on whether the income is derived from debt securities or equities.

Dividends from special purpose vehicles under REIT regulations are taxed at 0% or 35%, while dividends from companies exempt from tax or carrying forward losses are taxed at 25%.

The FBR said the growth in dividend-related tax receipts reflects broader efforts to expand the tax base and strengthen compliance, even as monthly collections fluctuate.

Pakistan has been seeking to boost revenue collection as part of wider fiscal consolidation measures aimed at stabilizing the economy and improving public finances.