The Securities Exchange Commission of Pakistan (SECP) has agreed with the contention of the Institute of Chartered Accountants Pakistan (ICAP) that Transfer Pricing is undertaken by companies for tax purposes, and is not part of the standard audit procedure.
After accepting the ICAP recommendation, the SECP has directed the three stock exchanges of the country to defer the implementation/applicability of the regulation relating to Transfer Pricing which forms part of the Listing Regulations of the stock exchanges and to grant exemption from application of clause 6 of Part-I of the Fourth Schedule to the Companies Ordinance, 1984, which also relates to Transfer Pricing to listed companies and their subsidiaries till March 31, 2005.
According to SECP sources, the data required to develop the benchmark for enforcement is being sourced.
The SECP has formed a committee with the ICAP to address lacunae in the Fourth Schedule and iron out the wrinkles.
Unfortunately, the Central Board of Revenue (CBR) also does not have a mechanism in place to check Transfer Pricing by multi-national companies, it said, adding there is, therefore, a need for watchdog to curb this malpractice.
The SECP says it has not dropped the issue from its agenda, but has only deferred the enforcement until all the related problems are adequately catered for.