PakistanPakistan

Legal ReferenceIncome Tax Ordinance, 2001, Section 108, Sub-Section 1

Legal ReferenceIncome Tax Rules 2002, Chapter VI (Transfer Pricing), Rule 22

Rule 22 of Chapter-VI. Subject to the other rules in this Chapter, the Commissioner, in applying this Chapter shall also be guided by international standards, case law and guidelines issued by the various tax-related internationally recognized organizations.

Legal ReferenceIncome Tax Rules 2002, Chapter-VIA (DOCUMENTATION AND COUNTRY-BY COUNTRY REPORTING REQUIREMENTS), Rule 4(g) (Definitions)

The “group” means a collection of entities related through ownership or control, such that- (i) it is either required to prepare consolidated financial statements for financial reporting purposes under any law for the time being in force or the accounting standards of the country or territory of which the parent entity is resident; or (ii) would have been required to be prepared had the equity shares of any of the entity were listed on a stock exchange in the country or territory of which the parent entity is resident;

Legal ReferenceIncome Tax Rules 2002, Chapter-VI (Transfer Pricing), Rule 23 Sub Rule 3

• CUP (provided)
• Resale Price (provided)
• Cost Plus (provided)
• TNMM (not provided)
• Profit Split (provided)
• Other (not provided)

The pricing methods are selected as per the nature of sectoral transactions.

• Hierarchy of methods (not selected)
• Most appropriate method (selected)
• Other (not selected)

Transfer pricing manual is under development.

No local comparability databases are available.

Legal ReferenceIncome Tax Rules 2002, Chapter-VI (Transfer Pricing), Rule 22

Yes. Pakistan follows (or largely follows) the guidance in Chapter VII of the TPG.

Legal ReferenceIncome Tax Ordinance, 2001, Section 106, Sub-Section 1

Legal ReferenceIncome Tax Rules 2002, Chapter-VI (Transfer Pricing), Rule 22

Yes. Pakistan follows (or largely follows) the guidance in Chapter VIII of the TPG.

Legal ReferenceIncome Tax Ordinance, 2001, Section 108, Sub-Section 3-5; Income Tax Rules 2002, Chapter-VIA (DOCUMENTATION AND COUNTRY-BY COUNTRY REPORTING REQUIREMENTS), Rule 27A-27Q

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (not selected)
• Other (specify): (not selected)

Legal ReferenceIncome Tax Ordinance, 2001, Section 108, Sub-Section 3-5; Income Tax Rules 2002, Chapter-VIA (DOCUMENTATION AND COUNTRY-BY COUNTRY REPORTING REQUIREMENTS), Rule 27A-27Q

For each documentation requirement, the timing for preparation or submission, language, any difference in respect to the Action 13 three-tier approach, notification in the case of CbCR. Deadlines: The country-by-country report required to be filed under this chapter shall be filed not later than twelve months after the last day of the reporting fiscal year of the MNE group. Threshold: MNE group has a total consolidated group revenue equivalent to seven hundred and fifty million euros or more, or an equivalent amount in Pakistan Rupees, during the fiscal year immediately preceding the reporting fiscal year as reflected in its consolidated financial statements for such preceding fiscal year.

Legal ReferenceIncome Tax Ordinance, 2001, Section 182, Sub-Section 1A

Imposition of penalty on non-filing/ late filing. A penalty of Rs.2500 for each day of default from the due date subject to a minimum penalty of Pakistani Rs.10,000/-

Pakistan has no APAs at the moment. Pakistan MAP Profile.

• Rulings (not selected)
• Enhanced engagement or cooperative compliance programmes (not selected)
• Advance Pricing Agreements (APA) (not selected)
• International Compliance Assurance Programme (ICAP) (not selected)
• Mutual Agreement Procedures (selected)
• Other (please specify): (not selected)

It is under consideration

As of March 2025, there has been no regulation established regarding the application of the simplified and streamline approach.

There are no regulations available in domestic law mentioning the TP year-end adjustments in Pakistan.

Article 7 as it reads after 2010.

• Article 7 as it read before 2010. (not selected)
• Article 7 as it reads after 2010. (selected)
• Other (please provide additional details) (not selected)

Legal ReferenceIncome Tax Ordinance, 2001, Section 105

Section 105 of the Income Tax Ordinance, 2001, provides guidance for the attribution of profits to permanent establishments of non-resident entities.

Legal ReferenceIncome Tax Ordinance, 2001, Section 105

The profit of the permanent establishment shall be computed on the basis that it is a distinct and separate person engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the non-resident person of which it is a permanent establishment; There shall be allowed as deductions any expenses incurred for the purposes of the business activities of the permanent establishment including executive and administrative expenses so incurred, whether in Pakistan or elsewhere. No deduction shall be allowed for amounts paid or payable by the permanent establishment to its head office or to another permanent establishment of the non resident person (other than towards reimbursement of actual expenses incurred by the non-resident person to third parties) by way of: (i) royalties, fees or other similar payments for the use of any tangible or intangible asset by the permanent establishment; (ii) compensation for any services including management services performed for the permanent establishment; or (iii) profit on debt on moneys lent to the permanent establishment, except in connection with a banking business; and No account shall be taken in the determination of the income of a permanent establishment of amounts charged by the permanent establishment to the head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the permanent establishment to third parties) by way of: (i) royalties, fees or other similar payments for the use of any tangible or intangible asset; (ii) compensation for any services including management services performed by the permanent establishment; or (iii) profit on debt on moneys lent by the permanent establishment, except in connection with a banking business.

Transfer pricing manual is under development.