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Indirect Cost Agreement Template for Pakistan

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Key Requirements PROMPT example:

Indirect Cost Agreement

"I need an Indirect Cost Agreement for our Pakistan-based shared services center that will allocate IT and administrative costs across five subsidiary companies in the APAC region, with implementation planned for March 2025."

Document background
The Indirect Cost Agreement serves as a crucial document for organizations operating in Pakistan that need to establish a formal framework for sharing and allocating overhead expenses. This agreement becomes essential when multiple entities, departments, or projects share common resources and facilities, requiring a systematic approach to cost distribution. The document ensures compliance with Pakistani taxation laws, particularly the Income Tax Ordinance 2001 and relevant accounting standards, while providing a clear methodology for cost allocation. It is commonly used in group companies, shared service arrangements, and joint ventures where indirect costs need to be fairly distributed among participating entities. The agreement includes comprehensive details about cost pools, allocation methods, documentation requirements, and review mechanisms, serving as both a legal document and an operational guide for cost management.
Suggested Sections

1. Parties: Identification of all parties to the agreement, including their legal status and registration details

2. Background: Context of the agreement, existing relationships between parties, and purpose of the cost-sharing arrangement

3. Definitions: Detailed definitions of terms used throughout the agreement, particularly technical terms related to cost accounting

4. Scope of Agreement: Overview of activities and costs covered under the indirect cost arrangement

5. Cost Pool Definition: Detailed description of what constitutes indirect costs under this agreement

6. Allocation Methodology: Agreed method for calculating and allocating indirect costs between parties

7. Payment Terms: Timing and method of indirect cost payments or settlements

8. Record Keeping: Requirements for maintaining cost records and supporting documentation

9. Audit Rights: Provisions for verifying cost calculations and examining supporting documentation

10. Term and Termination: Duration of the agreement and conditions for termination

11. Dispute Resolution: Process for resolving disagreements about cost calculations or allocations

12. Governing Law: Specification of Pakistani law as governing law and relevant jurisdictions

Optional Sections

1. Cost Adjustment Mechanism: Used when parties want to include provisions for periodic review and adjustment of cost allocation percentages

2. Service Level Requirements: Include when the cost sharing is tied to specific service levels or performance metrics

3. Intellectual Property Rights: Necessary when shared costs include technology or IP-related expenses

4. Confidentiality: Include when cost information is sensitive or proprietary

5. Transfer Pricing Compliance: Required when parties are related entities subject to transfer pricing regulations

6. Force Majeure: Include when parties want protection from unexpected events affecting cost structure

7. Insurance Requirements: Necessary when cost sharing includes risk-related elements requiring insurance coverage

Suggested Schedules

1. Schedule A - Cost Categories: Detailed listing and description of all indirect cost categories covered by the agreement

2. Schedule B - Allocation Keys: Specific metrics and formulas used for cost allocation calculations

3. Schedule C - Calculation Examples: Sample calculations showing how the cost allocation methodology works in practice

4. Schedule D - Reporting Templates: Standard formats for regular cost reporting and reconciliation

5. Schedule E - Excluded Costs: List of costs specifically excluded from the indirect cost pool

6. Appendix 1 - Contact Details: List of key personnel responsible for cost management and their contact information

7. Appendix 2 - Documentation Requirements: Detailed requirements for supporting documentation and record keeping

8. Appendix 3 - Review and Approval Process: Step-by-step process for periodic review and approval of cost allocations

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions

































Clauses






























Relevant Industries

Manufacturing

Information Technology

Professional Services

Construction

Healthcare

Education

Financial Services

Telecommunications

Logistics and Supply Chain

Research and Development

Consulting Services

Shared Services Industry

Relevant Teams

Finance

Accounting

Tax

Legal

Operations

Procurement

Internal Audit

Compliance

Treasury

Shared Services

Corporate Finance

Financial Planning and Analysis

Relevant Roles

Chief Financial Officer

Finance Director

Cost Accounting Manager

Financial Controller

Operations Director

Shared Services Manager

Tax Manager

Corporate Finance Manager

Business Unit Head

Compliance Officer

Treasury Manager

Procurement Director

Group Finance Manager

Financial Planning Analyst

Internal Audit Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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