Pakistan's current Taxation system is defined by Income Tax Ordinance 2001 (for direct taxes) and Sales Tax Act 1990 (for indirect taxes) and administrated by Federal Board of Revenue (FBR). History The Income Tax Act of 1922 The Income Tax Act of 1922 was prevalent during the British Raj and was inherited by both the governments of India and Pakistan upon independence and partition in 1947. This act initially formed the basis of both countries' Income Tax codes. The Income Tax Ordinance (1979) The Income Tax Ordinance was the first law on Income Tax which was promulgated in Pakistan from 28 June 1979 by the Government of Pakistan. by Ali The Income Tax Ordinance, 2001 To update the tax laws and bring the country's tax laws into line with international standards, the Income Tax Ordinance 2001 was promulgated on 13 September 2001. It became effective from 1 July 2002. IT rules 2002 IT (Income Tax) rules 2002 were promulgated by the Federal Board of Revenue (FBR) on 1 July 2002 in exercise its powers granted under section 237 of the Ordinance. Problems Taxation in Pakistan is a complex system of more than 70 unique taxes administered by at least 37 agencies of the Government of Pakistan. According to the FBR, in 2021, the number of registered tax filers had grown to 7.1 million out of which only 2.5 million were active tax filers. The FBR has surpassed its collection target by RS 247 billion from July to March of current fiscal year 21-22. Which represents increase by 29.1% over the collection of rupees 3,394 billion during the same period last year. On the other hand gross collections also increased by 28.9%. Direct taxes / Income Taxes Federal income taxes are administered by the Federal Board of Revenue. The period from July 1 to June 30 is considered as a normal tax year for Pakistan tax law purposes. Corporate Income tax rates Currently, the Corporate Income tax rate is 29% for tax year 2019 and onwards whereas the corporate tax rate is 35% for Banking Industry for TY 2019. In addition to Corporate Tax, there are other applicable income taxes including Super Tax, Minimum Tax, and Tax on Undistributed reserves. Generally, manufacturing business is taxable at Corporate Tax rate whereas trading business and commercial imports business is taxable as "minimum tax". For example, 5.5% withholding income tax is applicable on commercial