ISLAMABAD, January 2018: Telecom companies have defaulted on tax payments worth 151 billion rupees, the Federal Bureau of Revenue, FBR, told the Senate Standing Committee on Information Technology, IT.
According to FBR’s statement, four licensed Telecom operators including Mobililink/Jazz, Zong, Telenor and Ufone have not paid PKR 89 billion in sales tax and PKR 62 billion of income tax since 2013. The companies are legally bound to pay this amount before handing the sales tax to the respective provinces.
FBR officials also revealed that Telenor was the first company whose three months audit was completed, and it was found that Telenor did not pay PKR.267 million in terms of withholding tax. Expressing concern, the officials revealed that the default payments could run into billions if the audit of the whole year was carried out.
The committee has further directed FBR to present the findings of the audit of telecom companies from six months till December 2017. It also directed Director General Federal Investigation Agency to appear in the next session.
Telenor rejects FBR’s claims
Meanwhile, Telenor has denied that they have defaulted on tax payments. In an official statement given to Digital Rights Monitor, Telenor Chief Corporate Affairs officer Kamal Ahmed stated that the company had paid PKR 275 billion in direct and indirect taxes to national exchequer.
“Telenor Pakistan has been making a positive contribution to the society and economy and is one of the largest contributors to the national exchequer. Through our Code of Compliance we are committed to meeting all our legal obligations and carrying out our operations in strict accordance with the laws of Pakistan while upholding the highest standards of corporate ethics and integrity”, he said, “We received a notice from FBR and we have responded with details of tax payment for the period in question. We can confidently claim to have carried out all our statutory fiscal obligations. As one of the highest taxpayers, over the past 12 years, we have contributed over PKR 275B to the national exchequer in the form of direct and indirect taxes. We have policies and procedures in place that ensure strict adherence and compliance to all taxation rules and regulations.”
DRM has also reached out to Ufone, Mobilink/Jazz and Zong for their response on FBR’s allegation, however the three telcos have not given an official response.
An unfolding scandal
FBR had begun the audit of telecom companies at the orders of Senate Standing Committee on IT. Companies had been providing data for audit to the FBR since July 2017. Initially they are doing audit based on three months data being provided by the companies. It is to be noted that FBR can only open up five year old data for audit.
Previously, Chairman of the Senate Standing Committee on Finance, Salim Mandiwala had termed the telcom industry tax evasion issue ‘ the biggest scam of the century’.