Income Tax Ordinance, 2001

CHAPTER-VII

INTERNATIONAL PART III TAXATION OF NON-RESIDENTS

Income Tax Ordinance, 2001 CHAPTER-VII INTERNATIONAL PART III TAXATION OF NON-RESIDENTS From: 2024-12-29 - To: 0000-00-00 1[106A. Restriction on deduction of profit on debt payable to associated enterprise.- (1) Subject to sections 108 and 109 a part of deduction for foreign profit on debt claimed by a foreign-controlled resident company (other than an insurance company, or a banking company) during a tax year, shall be disallowed according to the following formula, namely:- [B] - [(A + B) x 0.15] where- A is the taxable income before depreciation and amortization; and B is the foreign profit on debt claimed as deduction (2) This section shall not apply to a foreign-controlled resident company if the total foreign profit on debt claimed as deduction is less than ten million rupees for a tax year. (3) Where in computing the taxable income for a tax year, full effect cannot be given to a deduction for foreign profit on debt, the excessive amount shall be added to the amount of foreign profit on debt for the following tax year and shall be treated to be part of that deduction, or if there is no such deduction for that tax year, be treated to be the deduction for that tax year and so on for three tax years. (4) Notwithstanding the provisions of section 106, where deduction of foreign profit on debt is disallowed under this section and also under section 106, the disallowed amount shall be the higher of the disallowed amount under this section and section 106. (5) This section shall apply in respect of foreign profit on debt accrued with effect from the first day of July, 2020, even if debts were contracted before the first day of July, 2020. (6) In this section- (a) “foreign-controlled resident company” means a resident company in which fifty per cent or…