Written by Faisal Shahnawaz in Taxation Section 80 of the Income Tax Ordinance, 2001 sets out the individuals, companies, associations, governments and legal arrangements treated as persons for income tax purposes. ISLAMABAD: The Federal Board of Revenue (FBR) has clarified the definition of a “person” for income tax purposes for Tax Year 2027 under the Income Tax Ordinance, 2001. According to the Income Tax Ordinance, 2001, updated up to June 30, 2026, Section 80 sets out the categories of persons recognised for income tax purposes. The provision covers individuals, companies, associations of persons (AOPs), governments and certain other legal entities and arrangements. Individuals, Companies and Governments Under Section 80(1), the term “person” includes an individual, a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere. It also includes: • An individual; • A company or association of persons (AOP) incorporated, formed, organised or established in Pakistan or elsewhere; and • The Federal Government, a foreign government, a political sub-division of a foreign government, or a public international organisation. The section further provides specific definitions for the terms used to determine which entities fall within the scope of a person for income tax purposes. Association of Persons Section 80(2)(a) provides that an association of persons includes a firm, Hindu undivided family, artificial juridical person, limited liability partnership and any body of persons formed under foreign law. However, a company is excluded from the definition of an association of persons. The provision therefore distinguishes between companies and other collective arrangements that may be treated as AOPs for tax purposes. What Constitutes a Company The definition of a company under the Income Tax Ordinance extends beyond entities incorporated under the Companies Act, 2017. It includes: • A company as defined under the Companies Act, 2017; • A body corporate formed by or under any law in force in Pakistan; • A modaraba; • A body incorporated under the law of a country outside Pakistan relating to the incorporation of…