Income Tax Ordinance, 2001 — Section 6: Tax on certain payments to non-residents

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 2[, fee for offshore digital services 3[, fee for money transfer operations, card network services, payment gateway services, interbank financial telecommunication 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 4[amounts of receipts mentioned in sub-section (1)].

(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 5[ ] 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. 1 Inserted by the Finance Act, 2017 2 Inserted by the Finance Act, 2018 3 The expression inserted by the Finance Act, 2022. 4 The expression “amount of the royalty 4[,free for offshore digital services] or fee for technical services” substituted by the Finance Act, 2022. 5 The expression “for technical services 5[or fee for offshore digital services” omitted by the Finance Act, 2022. 37 Chapter II – Charge of Tax

(4)Any Pakistani-source royalty 1[ 2[or fee] 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.