Final Tax Regime and Minimum Tax Chapter- 22
(3) This section shall not apply to -
(a) any royalty where the property or right giving rise to the royalty is effectively connected
with a permanent establishment in Pakistan of the non-resident person;
(b) any fee where the services giving rise to the fee are rendered through a permanent
establishment in Pakistan of the non-resident person; or
(c) any royalty or fee for technical services that is exempt from tax under this Ordinance.
(4) Any Pakistani-source royalty or fee received by a non-resident person to which this section
does not apply by virtue of clause (a) or (b) of sub-section (3) shall be treated as income from
business attributable to the permanent establishment in Pakistan of the person.Income from royalty [Rule 18] Fee for technical services [Rule 19]The income of a non-resident person by way of
royalty received from a resident person or a PE in
Pakistan of a non-resident person shall be-
- Royalty received as per agreement made
before 8.3.1980 covered under NTR:
in the case a royalty received in pursuance of
an agreement made before 8.3.1980, or an
agreement made on or after the said date the
proposal in respect of which was approved by
the Government before the said date, the gross
amount of the royalty less the deductions
allowed u/s 40; or - Where final tax regime does not apply OR
Royalty received in pursuance to any other
agreement:
In any other case where FTR does not apply,
the gross amount of the royalty less the
following expenditure:
Any expenditure incurred in Pakistan in earning
such income and in respect of any work done in
pursuance of such agreement; and
Any expenditure incurred outside Pakistan in
pursuance of such agreement not exceeding
10%of gross amount of royalty.
No expenses shall be allowed where royalty is
fully covered under FTR.
Same as in column except that royalty shall be
replaced by the words fee for technical services–- Same as in column 1 except that royalty
shall be replaced by the words fee
received: - Fee for technical services received as per
agreement made on or after 8.3.1980 but
before 04- 05 - 1981 covered under NTR:
In the case of fee received in pursuance of
an agreement made on or after 8.3.1980 but
before 4.5.1981, the gross amount of the fee
less the deductions allowed u/s 40 with a
maximum total deduction equal to 20% of
the gross amount of such fee; or - Fee for technical services received
covered under NTR on which FTR is not
applicable:
In any other case to which FTR does not
apply, the gross amount of fee for technical
services less the following expenditures;
Any expenditure incurred in Pakistan to earn
such fee for technical services, wherever
paid.
Any expenditure incurred outside Pakistan in
pursuance of such agreement not
exceeding10% of gross amount of fee for
technical services.
Provided that a non-resident may opt for
taxation under final tax regime by filing a
written declaration/ option within 15 days of
the commencement of contract. Such option
shall remain operative till completion of the
said contract.
No expenses shall be allowed where fee for
technical service is fully covered under FTR.
Tax on shipping income of a non-resident person Tax on air transport income of a non-resident