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Pakistan: Changes to alternative dispute resolution

Legislation intended to streamline the ADR mechanism

february 25, 2026

The National Assembly has passed legislation that substitutes the alternative dispute resolution (ADR) scheme in section 134A of the Income Tax Ordinance, 2001, intending to streamline the ADR mechanism.

The Income Tax Ordinance (Third Amendment) Act, 2026, includes changes to:

  • Constitution and composition of the ADR Committee
  • Timeline for decision and post-failure forum
  • Right of appeal for state-owned entities (SOEs), except SOEs directly or indirectly wholly owned by the federal government
  • Abatement of pending petitions of SOEs
  • Enablement for court-driven references
  • Automatic transfer of disputes
  • Remuneration of the chairperson and the taxpayer’s nominated ADRC member

Read a February 2026 report prepared by the KPMG member firm in Pakistan

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