Common Rules Chapter- 16
(e) "Common expenditure" means expenditure that is not clearly allocable to any particular class
or classes of income, such as general administrative and other such allocable expenditures.2 .1 Computation of export profits attributable to export sales [U/R 231]
Where a taxpayer exports any goods manufactured in Pakistan, the taxpayer's profits attributable to
export sales of such goods shall be computed in the following manner namely:
(a) where a taxpayer maintains separate accounts of the business of exports of goods
manufactured in Pakistan, the profits of the export business shall be amount as may be
determined by the Commissioner Inland Revenue on the basis of such accounts; or
(b) in other cases, profits of such business shall be amount which bears to the total profits of the
business of the taxpayer from the sale of goods, the same proportion as the export sales of
goods manufactured in Pakistan bear to the total sales of goods.
In this rule:
(a) the expression "export sales" means the F.O.B. price of the goods exported; and
(b) the expression "total sales" means,-
i. the aggregate of exports sales as determined under clause (a);
ii. the ex-factory price of goods sold in Pakistan, where the goods exported out of Pakistan
were manufactured by the exporter; or
iii. the ex-godown price of goods sold in Pakistan, in other cases.
Example:
ABC Ltd is a listed company and provides you the following data to calculate the tax liability for the
tax year 20 23.
Rs.
Local sales 100,000
Exports 200,000
Cost of goods sold 50,000
Administrative expenses 40,000
Solution:
Local sales is chargeable to tax under NTR
Exports sales is chargeable to tax under FTR
Rs. Rs. Rs.
NTR FTR Total
Sales 100,000 200,000 300,000(percentage) (^) 33.33 66.67 100.00
Cost of sales 16,667 33,333 50,000
Gross profit 83,333 166,667 250,000
Administrative expenses 13,333 26,666 40,000
Taxable income 70,000 140,000 210,000
Tax liability under NTR:
Tax on Rs. 70,000 @ 29 % (A) 20 , 300
Turnover tax [100,000 x 1. 25 %] (B) 1, 250
Higher of (A) or (B) 20 , 300
Tax liability under FTR:
Tax on export proceeds of Rs. 200,000 @ 1% 2,000
Total tax liability 22 , 300