Group taxation under income tax

Group taxation under income tax

Section 59AA of Income Tax Ordinance, 2001 explained tax treatment of holding companies and subsidiary company.

The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.  

Following is the text of Section 59AA of the Income Tax Ordinance, 2001:

59AA. Group taxation.— (1) Holding companies and subsidiary companies of 100% owned group may opt to be taxed as one fiscal unit. In such cases, besides consolidated group accounts as required under the Companies Act, 2017 (XIX of 2017), computation of income and tax payable shall be made for tax purposes.

(2) The companies in the group shall give irrevocable option for taxation under this section as one fiscal unit.

(3) The group taxation shall be restricted to companies locally incorporated under the Companies Act, 2017 (XIX of 2017).

(4) The relief under group taxation would not be available to losses prior to the formation of the group.

(5) The option of group taxation shall be available to those group companies which comply with such corporate governance requirements and group designation rules or regulations as may be specified by the Securities and Exchange Commission of Pakistan from time to time and are designated as companies entitled to avail group taxation.

(6) Group taxation may be regulated through rules as may be made by the Board.

(Disclaimer: The text of above section is only for information. Team makes all efforts to provide the correct version of the text. However, the team is not responsible for any error or omission.)

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