Income Tax Ordinance, 2001

CHAPTER-VIII

ANTI-AVOIDANCE

From: 2023-07-01 - To: 0000-00-00 109. Recharacterisation of income and deductions.- (1) For the purposes of determining liability to tax under this Ordinance, the Commissioner may- (a) recharacterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme; (b) disregard a transaction that does not have substantial economic effect; 1[***] (c) recharacterise a transaction where the form of the transaction does not reflect the substance 2[;] 3[(d) from tax year 2018 and onwards, disregard an entity or a corporate structure that does not have an economic or commercial substance or was created as part of the tax avoidance scheme 4[: or (e) from tax year 2018 and onwards, treat a place of business in Pakistan as a permanent establishment, if the said place fulfills the conditions as specified in sub-clause (g) of clause (41) of section 2.] (2) In this section, “tax avoidance scheme” means any transaction where one of the main purposes of a person in entering into the transaction is the avoidance or reduction of any person’s liability to tax under this Ordinance. 2[(3) Reduction in a person’s liability to tax as referred to in sub-section (2) means a reduction, avoidance or deferral of tax or increase in a refund of tax and includes a reduction, avoidance or deferral of tax that would have been payable under this Ordinance, but are not payable due to a tax treaty for the avoidance of double taxation as referred to in section 107.] _________________________________________________ 1-Word “or omitted by Finance Act, 2022, dated 30-06-2022 2-For full stop added by Finance Act, 2022, dated 30-06-2022 3-Inserted vide Finance Act, 2018, (XXX of 2018) assented on 22nd May, 2018 4-Clause “(e)” added by Finance Act, 2022, dated 30-06-2022 5-Added vide Finance Act, 2018, (XXX of 2018) assented on 22nd May, 2018 From: 2022-07-01 - To: 0223-06-30 109. Recharacterisation of income and deductions.- (1) For the purposes of determining liability to tax under this Ordinance, the Commissioner may- (a) recharacterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme; (b) disregard a…