FBR sets out ownership and control criteria for identifying beneficial owners under Pakistan’s income tax framework.

ISLAMABAD: The Income Tax Ordinance, 2001 has defined the term “beneficial owner” for Tax Year (TY) 2027, establishing criteria for identifying individuals who ultimately own or control a company or association of persons.

The Federal Board of Revenue (FBR) has released an updated version of the Income Tax Ordinance, 2001, incorporating amendments up to June 30, 2026. The updated law sets out the definition of a beneficial owner for income tax purposes.

According to the ordinance, a beneficial owner is a natural person who ultimately owns or controls a company or association of persons, either directly or indirectly.

The definition covers an individual who ultimately owns or controls a company or association of persons through at least 25 per cent of the shares or voting rights.

The ordinance also includes a natural person who exercises ultimate effective control, whether directly or indirectly, over a company or association of persons.

Such control may extend to authority over the finances, decision-making or other affairs of the company or association of persons.

The provision is aimed at identifying the individual who ultimately owns or exercises effective control over an entity, including situations where ownership or control is established through indirect arrangements.

The updated provisions will apply for Tax Year 2027, providing the legal framework for determining beneficial ownership under Pakistan’s income tax regime.