Senate body takes up Rs 47bn ‘tax evasion’ by telecom firms

Senate body takes up Rs 47bn ‘tax evasion’ by telecom firms

The Senate standing committee on cabinet secretariat on Thursday took up the two-year-old alleged Rs47 billion tax evasion by telecom companies saying the actual amount may have doubled and required adjudication.

In July 2012, the National Accountability Bureau (NAB) had served notices on five telecom operators to clear their pending tax dues that amounted to Rs47 billion.
While the telecom operators insisted that they did not evade taxes, the bureau believed that the companies were charging consumer sales tax and withholding it instead of depositing the money with the government. However, there has been no outcome of the NAB investigation so far.

Although the subject was not on the agenda of the Senate committee which met to discuss the 3G auction held last month, the question was nonetheless raised by Senator Rubina Khalid. She believed that the telecom operators charged consumers billions of rupees in the sales tax and withheld it.

However, PTA Member Finance Tariq Sultan informed the participants of the meeting that the telecom companies charged their subscribers 19.5% general sales tax (GST), 15% withholding tax and 7% service charges.

Tariq Sultan said:
[pull_quote_center]According to our knowledge, the telecom operators deposit these amounts with the government otherwise they would have to pay penalties under the FBR rules. However, it is not the PTA mandate to collect taxes from the operators.[/pull_quote_center]

Senator Mandokhel said:
[pull_quote_center]We will assist the regulator in any way possible to ensure that the telecom operators paid the government taxes even if it required amendments to the PTA rules.[/pull_quote_center]

But the PTA has been urging the government to lower the taxes being charged from the telecom operators to increase sales and generate more returns.

The members urged the chair of the committee, Senator Kalsoom Parveen, to invite the FBR and the PTA to the next meeting so that they can explain how the taxes collected from the consumers were being utilized.