Senate Standing Committee on Information Technology and Telecommunication Raises Questions Against Telecom Industry Performance

The Federal Board of Revenue (FBR) has decided to conduct forensic audit of the telecom operators in order to inspect the tax collection and financial statements submitted by each cellular company. This decision was made by the Senate Standing Committee on Information Technology and Telecommunication which met with Mr. Shahi Syed in the chair on Thursday.

Pakistan Telecommunication Authority (PTA) officials while briefing the committee reported that the annual cellular mobile revenue during 2013-14 was Rs 322.7 billion which is 70% of the total telecom revenues Rs 465.5 billion. The spectrum auction for NGMS services generated total revenue of $1.224 billion to the national exchequer including advance tax at l0% of the total auction winning price amounting to $1.11 billion.

To ensure the transparency in the tax collection process FBR took the responsibility as it comes under the jurisdiction of the FBR.

It is worth noting that:

[pull_quote_center]Cellular operators have already paid $965.3 million in the Federal consolidated fund and $111.3 million (10% of $1.112 billion) to FBR, and the remaining amount of $147.5 million plus markup will be paid by the operators within next five years. In terms of taxes, the operators have contributed Rs 474.6 billion to the national exchequer during the last five years. [/pull_quote_center]

Another point to be noted is that taxes on telecom consumers account to over 30% of the total cost of mobile ownership, which is one of the highest effective tax rates in the world.

The Ministry officials suggested that the Government may establish a regulatory body to regulate IT Companies in the country and studying the leading IT export-oriented countries like India, Philippines, Malaysia, Egypt and Ireland to determine the level of regulations on IT industry and nature of established regulatory body, can also be a beneficial step in this regard.

FLAWED PTCL DEAL: The controversial sale of Pakistan Telecommunication Company Ltd (PTCL) was also brought into light during the discussion, as the committee demanded answers as to why Etisalat had not paid the outstanding $800 million to Pakistan government to complete the deal.

In this regard, Shahi Syed, the chair of the committee said:

[pull_quote_center]The sale of this profit-making company was flawed from the start, especially when the government could not fulfil most of its commitments. My heart goes out to the 40,000 former PTCL employees who have been denied their pensions for many years.[/pull_quote_center]

Note: PTCL was sold to UAE’s Etisalat in 2006 under a privatization programme of then Prime Minister Shaukat Aziz.

The committee also raised concerns over the 40,000 pensioners including 10,000 widows PTCL affectees. For both these matters, the committee asked the President PTCL and Privatization Commission officials to attend next meeting and present agreement copy in the next meeting in order to expose people behind faulty agreement.

Mr. Shahi Syed expressed his displeasure that the IT ministry had not implemented recommendations given by the Senate committee and for the smooth working of all stakeholders the ministry must become efficient enough to the meet the demands of the day.

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