ISLAMABAD: Section 6 of Income Tax Ordinance, 2001 deals with tax chargeability on certain payments made to non-residents.
The Federal Board of Revenue (FBR) issued the updated Income Tax Ordinance, 2001. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 6 of Income Tax Ordinance, 2001:
Section 6. Tax on certain payments to non-residents.— (1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IV of Part I of the First Schedule, on every non-resident person who receives any Pakistan-source royalty, fee for offshore digital services] or fee for technical services.
(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amount of the royalty, free for offshore digital services] or fee for technical services.
(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 for technical services or fee for offshore digital services] 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, fee for offshore digital services or fee for technical services 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.
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