FBR to Introduce a Mechanism for Tax Collection from Telecom Operators

The Federal Board of Revenue (FBR) is executing a new system for cellular companies for real time collection/payment of withholding tax from its users. As we all know that there wasn’t an effective tax collection system in Pakistan due to which there was no motivation for people to proactively contribute in the tax return exercise. Therefore they indulged in tax eluding practices putting pressure to bring higher indirect taxation like the one being collected by the mobile operators and other utility companies.

So with the new Intelligent Tax System the precise usage and tax collection process would be properly supervised by the FBR. Officials from FBR revealed that tax authorities have decided to initiate the process for establishing withholding data incorporation with all cellular companies simultaneously to guarantee accuracy in the sum of taxes collected from phone users.

FBR to Introduce a Mechanism for Tax Collection from Telecom Operators

“In this regard a pilot project for real-time connectivity will be initiated, which might start functioning by the end of January 2017.”

Said FBR officials while briefing the Senate Standing Committee on Information Technology and Telecommunication.

The committee met on Thursday under the chairmanship of Senator Shahi Syed.

Senator Rehman Malik also inquired about the facts and figures collected on account of withholding tax from cellular phone users. FBR answered that a mechanism was being worked out and within 3-4 months they would give a comprehensive report to the committee in this regard.

Also Read: FBR to Collect Withholding Taxes from Mobile Phone Operators on Real-time Basis

Chairman of the committee witnessed that it was a serious problem where billions of rupees were being collected on account of GST, WHT and Service Charges from cellular subscribers. Even those poor people of Pakistan who do not fall under the tax network and regrettably the FBR still had no mechanism to evaluate the taxes collected by telecom companies.

Also Read: Taxation and its Impact on the ICT Industry: A Post Budget Analysis

The Chairman committee also directed to give complete details of Sales Tax / FED set down by the telecom companies into the Government Treasury of Federation along with all provinces during the past three years.