When calculating Pakistani taxable income, book depreciation is disallowed and depreciation allowances are granted for assets owned by an enterprise. The depreciation allowance is granted in the first year the asset is put into use, but no allowance is allowed in the year the asset is disposed of.

The following are the rates for various asset types using the declining-balance method:

Buildings 10%

Plant and machinery 15%

Motor vehicles and ships 15%

Aircraft and aero engines 30%

Furniture 15%

Computer hardware, including monitors and printers 30%

Below-ground installations in mineral oil concerns 100%

Offshore platforms 20%

Initial Depreciation Allowance

An initial allowance of 50% of the cost of the asset is granted for most depreciable assets (15% for buildings).

Assets which are not eligible for an initial allowance include:

Plant and machinery previously used in Pakistan
Furniture and fixtures
Road transport vehicles not plying for hire

Intangible Assets

The cost of acquiring intangible assets such as patents, copyrights, software, licenses, etc. may be amortized over the normal useful life of the asset using the straight-line method. The asset must provide an advantage or benefit for more than 1 year and the amortization period cannot exceed 10 years.

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