Pakistan has amended its domestic tax law to expand the definition of permanent establishment to include virtual presence.
The amendment, introduced in the 2023 Finance Bill, was enacted on June 26, 2023.
The amended law omits the term ‘fixed’ from the main definition of permanent establishment, which refers to place of business.
The new law also provides that services provided through an ‘entity’ will also give rise to a permanent establishment. Presently, a permanent establishment is considered to exist where a non-resident provides services in Pakistan through its personnel or employees.