Tax Overview and Recommendations

Tax Losses Tax Consolidation / Group relief Transfer of shares Transfer of assets The tax loss rules in Pakistan differ depending on the type of revenue stream associated with the loss incurred. ☐ " " " Losses associated with "income from business" can be offset against any other type of income during a tax year. To the extent the loss cannot be offset, it may be carried forward and offset against "income from business" (and not other tax types) for up to six years. Losses representing unabsorbed depreciation and amortization are allowed to be carried forward until completely set-off. Losses associated with "income from other sources" can be set off against any other type of income during a tax year. However, the amount that cannot be offset is not allowed to be carried forward. Losses associated with "capital gains - other than securities" are not allowed to be set off against any other income type but can be carried forward and offset against capital gains income in future periods for up to six years. Losses associated with "capital gains on the sale of securities" are allowed to be set off against other capital gains on the sale of securities. However, the amount that cannot be offset is not allowed to be carried forward. Foreign losses can be carried forward for up six years but can only be offset against foreign income. There is no loss carry-back provision. Pakistan has a tax consolidation regime whereby a holding company and its wholly-owned subsidiary companies may opt to be taxed as one fiscal unit, subject to specified conditions being met. In addition, group relief is also available in certain circumstances. Under the regime, a company may surrender its assessed loss (excluding capital losses) for the tax year to its holding company, another subsidiary of its holding company or its own subsidiary. Stamp duty at the rate of 1.5 percent of face value (par value) will apply to the transfer of shares. Capital Value Tax (CVT) at the rate of 0.01 percent of the purchase value of shares of a public listed company will also apply. The CVT will be collected by the respective Stock Exchange. Land and buildings - stamp duty, capital value tax, property tax, town tax etc. at varying rates (according to prescribed tables/values) may apply to the transfer. Other tangible assets - the transfer of tangible assets is treated as disposal and resulting gain/loss on disposal of such assets may have a tax impact. Intangible assets - the transfer of intangible assets is treated as disposal and resulting gain / loss on disposal of such assets may have a tax impact. Other assets - the transfer of other assets is treated as a disposal and any resulting gain or loss on disposal of such assets may have a tax impact. KPMG © 2016 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. All rights reserved.

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