Preliminary Chapter- 04
contracts that are routinely concluded without material modification by the person and these
contracts are ─(a) in the name of the person; or
(b) for the transfer of the ownership of or for the granting of the right to use property owned
by that enterprise or that the enterprise has the right to use; or
(c) for the provision of services by that person; or”;(ii) has no such authority, but habitually maintains a stock-in-trade or other merchandise from
which the agent regularly delivers goods or merchandise on behalf of the other person; or
“Explanation.— For removal of doubt, it is clarified that an agent of independent status acting
in the ordinary course of business does not include a person acting exclusively or almost
exclusively on behalf of the person to which it is an associate; or(g) a fixed place of business that is used or maintained by a person if the person or an associate of a
person carries on business at that place or at another place in Pakistan and─
(i) that place or other place constitutes a permanent establishment of the person or an associate
of the person under this sub-clause; or
(ii) Business carried on by the person or an associate of the person at the same place or at more
than one place constitutes complementary functions that are part of a cohesive business
operation.Explanation.- For the removal of doubt, it is clarified that ─
(a) the term “cohesive business operation” includes an overall arrangement for the supply of
goods, installation, construction, assembly, commission, guarantees or supervisory activities
and all or principal activities are undertaken or performed either by the person or the associates
of the person; and
(b) supply of goods include the goods imported in the name of the associate or any other person,
whether or not the title to the goods passes outside Pakistan.Explanation: The concept of PE was never a part of the domestic law and was always defined in various
tax treaties. The definition of PE incorporated in the new Ordinance is based on OECD Model Tax Treaty. It
takes into account elaborate situations and eventualities that constitute PE.
"Person" [U/s 2(42)] The following shall be treated as persons for the purposes of this Ordinance,
namely:-
(a) An individual;
(b) a company or AOP incorporated, formed, organised or established in Pakistan or elsewhere;
(c) the Federal Government, a foreign government, a political sub-division of a foreign government, or
public international organisation
Explanation: This refers to the term defined in section 80.
“PMEX” [U/s 2(42A)] means Pakistan Mercantile Exchange Limited a futures commodity exchange
company incorporated under the Companies Act, 2017 and is licensed and regulated by the Securities and
Exchange Commission of Pakistan;
"Pre-commencement expenditure" [U/s 2(43)]
(1) A person shall be allowed a deduction for any pre-commencement expenditure in accordance with
this section.
(2) Pre-commencement expenditure shall be amortized @ 20% on straight-line basis.
(3) The total deductions allowed in the current tax year and all previous tax years in respect of pre-
commencement expenditure shall not exceed the amount of the expenditure.