FBR squashes telecom company proposal to resolve tax dispute

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ISLAMABAD: Telecom companies scheme to resolve tax disputes via Alternative Dispute Resolution Committees (ADRCs) has been outright rejected by Federal Board of Revenue (FBR).

It was disclosed during a meeting of Senate Standing Committee on Information Technology and Telecommunication held on Wednesday, reported an English daily.

Shahi Syed was presiding over the meeting and the tax regulator apprised the parliamentary panel forensic audit of all four telecom companies is set for completion by June 2018.

The tax regulator has demanded Rs287 million in taxes from one telecom company which failed to provide explanation for short-deduction of tax amount of Rs267 million. Telecom companies sought resolution of tax-linked matters via ADRCs, instead of the courts, but that request was rejected by FBR saying it wasn’t permitted under the law.

FBR’s Director General Withholding, Mehmood Aslam apprised the parliamentary panel about policy being created in conjunction with Pakistan Telecommunication on collection of taxes i.e. GST and WHT from telecom operators alongside details of taxes collected from them till now.

Taking into account, the major problems posed by examining of millions of transactional data linked to withholding taxes of so many subscribers of every telecom company on everyday basis, FBR has initiated pilot project for formulating an IT-based mechanism for retrieving subscribers’ withholding tax data.

FBR’s initiative would allow real-time monitoring of withholding taxes by telco’s. As per initial deployment of this system, analysis revealed short deduction of tax of Rs267 million and since the telco company was unable to provide explanation for non-deduction of tax, hence an order has been passed under Income Tax Ordinance 2001 for retrieval of Rs287 million in taxes including default surcharge.

Aside this, action undertaken under ITO 2001 for short/non-deduction of tax for 2014,2015 and 2016 had also been concluded, the FBR informed the parliamentary panel.

To their defence, the accused telecom company officials stated they were a law-abiding company and operates in strict adherence to local laws. They added some territories were exempted from taxes, hence as per law, the company wasn’t deducting taxes there.

The company official apprised the committee that it received a notice from FBR on January 4th 2018 regarding short-deposit of withholding tax amounting to Rs267 million for July-September 2017.

It contested FBR’s claim and provided verifiable tax payments of the audit and demanded withdrawal of this notice. The company mentioned it was fighting the case before Commissioner Appeals, as it can proclaim with confidence it undertook all statutory fiscal obligations.