Transactions of more than TK3 crore ($367,000) will be scrutinised by the National Board of Revenue (NBR) to ensure arm’s-length pricing from July 1 2012.
The NBR is also establishing a specialised transfer pricing cell to deal with the new legislation and transfer pricing officers (TPO) will be recruited to oversee audits.
Companies making international transactions with related entities will need to compile transfer pricing documentation and penalties will apply for non-compliance.
Plans to implement the legislation were floated last year, following a report by the UN on revenue loss in the country.
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