KARACHI: Federal Board of Revenue (FBR) has proposed through Finance Bill 2017 to establish Directorate General of Transfer Pricing.
The Finance Bill 2017 proposed to introduce a Directorate General of Transfer Pricing which shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers.
The primary function of the Directorate General is to conduct transfer pricing audit. The Bill also seeks to provide explanation regarding transfer pricing audit to mean the audit for determination of transfer price at arm’s length in transactions between associates and which would be independent from other audits of income tax affairs of the taxpayers that are conducted under sections 177, 214C and 214D.
It is further proposed that the FBR may by notification in the official Gazette, specify the criteria for selection of taxpayer for a transfer pricing audit and may further specify functions, jurisdiction and powers of Directorate – General of Transfer Pricing.
Considering the growing global emphasis, the intricacy of the issues involved in transfer pricing compliances and ensuring transparency between transactions between related parties, it is imperative that the person appointed as Directorate General should be well versed with the transfer pricing rules and regulations and is fully conversant with the global practices that are being employed with regard to determination of transactions between related parties meeting the arm’s length principles.
