NRCs transfer pricing issue: FBR plans to amend IT law in fiscal year 2016 budget
The Federal Board of Revenue (FBR) is planning to introduce amendments to the income tax law in next federal budget (2015-16) to effectively deal with the transfer pricing issues of non-resident companies. Sources told Business Recorder on Monday that the first meeting of the FBR’s transfer pricing unit would be held on January 13 at the FBR House.
The FBR intends to first introduce legislative changes in the income tax law to address issues pertaining to transfer pricing. Secondly, the FBR is also discussing proposed amendments to the Income Tax Rules, 2002 through the transfer pricing unit established at the FBR. The final proposals would be made part of the Finance Act 2015. Under existing law, the commissioner is empowered to distribute, apportion or allocate income, expenditures or tax credits between associates in respect of transactions not made in accordance with the arm’s length principle. The Commissioner, in applying the said chapter of Income Tax Rules shall also be guided by international standards and guidelines issued by the various tax-related internationally recognised organisations.
The existing transfer pricing procedure also deals with the comparable uncontrolled price method, resale price method, cost plus method and profit split method. The meeting would also identify cases for examination of transfer pricing issues, sources maintained.
According to FBR, a transfer pricing unit is set up at the FBR that will work towards establishing a strong transfer pricing regime by providing technical backstopping to field offices and building their capacity, developing a resource base including database of comparables, proposing improvements in law and policy and establishing a regime where transfer pricing adjustments are given due importance during proceedings.
Sources said that the unit will be headed by Malik Amjed Zubair Tiwana, Chief (Income Tax Policy-II) and supervised by Dr Muhammad Iqbal, Special Assistant to Chairman, FBR. The constitution of the Transfer pricing Unit will be as follows: Malik Amjed Zubair Tiwana, Chief (ITP-II), Head of the Unit; Muhammad Khalid Jamil, Secretary; Dr Tariq Masood, Chief (ITP-I), FBR (HQ); Girdhari Mal, Addl CIR, LTU, Karachi; Zia Agro, Addl CIR, LTU, Karachi; Abdul Jawwad, Addl CIR, LTU, Lahore and Muhallad Ali, DCIR, LTU, Islamabad, sources added.
