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Cellular companies overcharging users but pay less taxes, FBR says

Cellular companies overcharging users but pay less taxes, FBR says

New IT-based mechanism to ensure the effective monitoring of withholding taxes

Pakistan’s Federal Board of Revenue (FBR) reveals that Mobile phone operator companies deduct more taxes from users while paying less to the government.

According to FBR, cellular firms were overcharging their subscribers and possibly evading taxes as the paid to the government is not proportional to the collected amount, the Senate Standing Committee on Information Technology and Telecommunication observed.

FBR claimed in Senate Standing Committee on Information Technology headed by Senator Shahi Syed and found discrepancies in cellular companies’ billing and costing for mobile services, suggesting that mobile phone operators deduct more taxes from consumers than they transfer to the government.

FBR Director General Mehmood Aslam said the data uploaded on the IT-based electronic data sharing link by one telecom company was picked up for withholding audit for the months of July to Nov , showed company has not paid the government Rs267 million.

This default is primarily due to non-deduction of withholding tax upon cards sold/balance used in FATA/PATA. The telecom company was bound to withhold income tax. Proceedings in this case under the Income Tax Ordinance, 2001 are underway. Further progress will be shared in due course of time.

The committee observed that consumers got less talk-time despite paying more money due to overcharging by the companies over the past five years and the members also expressed fear alleged tax evasion by these operators.

Senate Standing Committee was informed that new IT-based electronic data sharing link is mandatory for all cellular companies uploading of subscribers’ withholding transactional data for conducting meaningful audit of withholding taxes thereof.

With this new mechanism, Federal Board of Revenue can now check the transaction data of subscribers for the entire year, as well over the past five years.

The tax official also claimed that four cellular mobile operators owed the government Rs89 billion in sales taxes accumulated over past several years, and another Rs62 billion in income taxes, which the operators have challenged in court.

The FBR has been asked to submit tax details of the companies till January 24, when next meeting will be held.

Last year, PPP Senator Rubina Khalid at a meeting called to discuss tax collection by the government from mobile companies, she said, “Cellular companies are charging their subscribers for one minute while giving them airtime of 45 seconds instead 60 without their knowledge”.

 

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