Islamabad, 4 January 2017: The Federal Board of Revenue (FBR) has detected a tax evasion of Rs. 267 million by Telenor Pakistan.
This information was shared by FBR officials while briefing the Senate Standing Committee on Finance that met under the chairmanship of Senator Salim Mandviwala on December 29, 2017.
Sharing findings of the audit conducted by FBR, it was noted that Telenor continued to collect withholding tax from the Federally Administered Tribal Areas and the Provincially Administered Tribal Areas through prepaid cards and did not inform the government about the collection of tax.
According to the Director-General of FBR’s Intelligence and Investigations, Khawaja Tanveer, the company [Telenor] did not agree with the audit findings but it would be penalized for tax collection and non-disclosure.
Khawaja Tanveer further said that this tax collection and non-disclosure was based on the audit of only three months of data shared by the company. He claimed that this disclosure had opened doors for further investigations into tax evasion by other telecom companies.
Senate Committee member Nasreen Jalil wondered why only one company was being singled out. In response, FBR’s representatives said that Telenor was the first company to provide tax data giving FBR enough room for detection. The officials ensured that the board will also audit data of other mobile companies including Mobilink, Zong and Ufone as they had also provided the required data.
Senator Mohsin Aziz questioned the FBR official regarding the non-deduction of withholding tax at source. “Treating telecom companies differently is a gross discrimination. Telecom companies should not blackmail us in the name of foreign investment. FBR should go after billions of rupees tax being collected by the mobile firms,” Aziz said.
FBR officials disclosed that there were sales-tax related cases of telecom sector involving Rs 89 billion under hearing in various courts.
“The biggest scam of the century”
While exclusively talking to Digital Rights Monitor, Chairman of the Senate Standing Committee on Finance, Salim Mandiwala expressed concern over this potential case of tax-evasion, going as far as terming it ‘ the biggest scam of the century’.
Senator Mandiwala noted that the committee had been repeatedly asking Federal Board of Revenue to initiate a third party audit of telecom companies but they had been adopting delaying tactics. “It seems as if FBR is conniving with the telecom companies”, he said.
Talking about the investigations, he revealed that the investigations were carried on a public complaint filed six months ago about the non-payment of withholding tax by telecom companies.
Meanwhile, sources in Telenor said that Telenor Pakistan was not garnering any withholding tax from FATA and PATA as they were exempted from it according to article 247 (3) of the constitution. He said that initially telecom companies were gathering withholding tax but we were urged to stop it by Federal Tax Ombudsman, FTO, which was impossible. Finally, a system was introduced by telecom sector under which it was possible to exempt certain areas from withholding tax.
The source noted that over the past few months, the telecom companies were unfairly accused of tax evasion even though they did not evade any tax.