Amendment in the section 85 – Associate Finance Act 2023
Amendment in the section 85 – Associate: Finance Act 2023 to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws WHEREAS, it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws for the purposes hereinafter appearing;
Finance Act has amended section 85 of the Ordinance to enlarge the scope of “associate” as under:
Two persons shall be associates where —
(i) 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) one person sufficiently influences, either alone or together with an associate or associates, the other person; an explanation has been inserted for the purpose of the section to the effect that two persons shall be treated as sufficiently influencing each other, where one or both persons, directly or indirectly, are economically and financially dependent on each other and, decisions are made in accordance with the directions, instructions or wishes of each other for common economic goal; or one person enters into a transaction, directly or indirectly, with the other who is a resident of a jurisdiction with zero taxation regime.
The above amendments in section 85 has enhanced and further elaborated the existing scope of law regarding associates for proper application of anti-avoidance measures and arm’s length principles. The Board is empowered to prescribe rules for the purpose of section 85 elaborating resident of a jurisdiction with zero taxation regime.
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