Associates or Associated Persons have been defined under Sales Tax Act, 1990.
Section 2 of Sales Tax Act, 1990 (updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) explained associates as:
(3) associates (associated persons) means, –
(i) subject to sub-clause (ii), where two persons associate and the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;
(ii) two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person;
(iii) without limiting the generality of sub-clause (i) and subject to sub-clause (iv), the following shall be treated as associates, namely: –
(a) an individual and a relative of the individual;
(b) members of an association of persons;
(c) a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;
(d) a trust and any person who benefits or may benefit under the trust;
(e) a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons–
(i) fifty per cent or more of the voting power in the company;
(ii) fifty per cent or more of the rights to dividends; or
(iii) fifty per cent or more of the rights to capital; and
(f) two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons –
(i) fifty per cent or more of the voting power in both companies;
(ii) fifty per cent or more of the rights to dividends in companies; or
(iii) fifty per cent or more of the rights to capital in both companies.
(iv) two persons shall not be associates under sub-clause (a) or (b) of paragraph (iii) where the Commissioner is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.
(v) In this clause, “relative” in relation to an individual, means–
(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or
(b) a spouse of the individual or of any person specified in sub-clause (a).
(3A) “association of persons” includes a firm, a Hindu undivided family, any artificial juridical person and anybody of persons formed under a foreign law, but does not include a company;
(3AA) “banking company” means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) and includes anybody corporate which transacts the business of banking in Pakistan;
