Jazz Settles $158 Million Tax Dispute with FBR After Court Ruling on Tower Sale

Jazz, Pakistan’s largest telecom operator, has agreed to pay $158 million to settle a major tax dispute with the Federal Board of Revenue (FBR), following a legal battle over the sale of its tower assets.

The settlement was made through the Alternate Dispute Resolution Committee (ADRC) on June 27, 2025, marking the end of a long-running case that began with a 2018 internal restructuring.

At the heart of the Jazz tax dispute was the transfer of its nationwide telecom tower infrastructure—valued at Rs98.5 billion ($940 million)—to a wholly owned subsidiary. The company had recorded an accounting gain of Rs75.9 billion from this transaction but argued it should not be taxed, claiming it was an intra-group transfer protected under Section 97(1) of the Income Tax Ordinance 2001.

However, on June 13, 2025, a division bench of the Islamabad High Court (IHC) ruled in favor of the FBR. Justice Babar Sattar, who headed the bench, determined that the sale was a taxable event. The court found that Jazz had accepted the fair market value of the deal and did not qualify for tax deferral, as the transaction did not meet the requirements of Section 97.

Following the ruling, Jazz faced a tax liability of around Rs22 billion ($78 million). To resolve the matter, the telecom company approached the ADRC and finalized a $158 million settlement covering all outstanding tax issues with federal authorities.

The court also clarified that accounting profits can be considered by the tax commissioner when determining tax obligations, setting a legal precedent for future corporate tax cases.

This case is significant as it confirms the FBR’s power to assess taxes on intra-group transactions, especially when high-value assets are involved. It also highlights the growing importance of legal clarity in Pakistan’s corporate tax environment, particularly in the fast-evolving telecom and digital infrastructure sectors.

The ADRC settlement allows Jazz to close the chapter on this dispute and refocus on its operations, especially as it continues to expand its digital and 5G infrastructure in the country.