Report from independent CA firm under Section 108A
Report from independent CA firm under Section 108A: International transfer pricing is dealt under section 108 but recent trends show that tax avoidance through transfer pricing is also increasing. In order to curb this practice a new section 108A has been added to the Ordinance.
Section 108A allows the Commissioner to obtain report from an independent chartered accountant or cost & management accountant to determine the fair market value of asset, product, expenditure or service at the time of transaction.
The Commissioner may obtain report if he is of the opinion that a transaction has not been declared on arm’s length principle.
If the Commissioner is satisfied with the report, the fair market value of the asset, product, expenditure or service as determined in the report shall constitute definite information for the purpose of sub-section (8) of section 122 and the Commissioner may proceed to amend the assessment on the basis of this information.
However, where the Commissioner is not satisfied with the report, he may seek report from another Chartered Accountant or Cost & Management Accountant.
The Commissioner can seek report only with the approval of the Board. The terms and conditions and the scope of the report shall be prescribed in the rules.
These explanations have been issued by FBR after the Finance Act 2019 approved / passed from the parliament of Pakistan.
