ISLAMABAD: Following the enactment of the ‘Tax Laws (Amendment) Ordinance, 2025’, the Federal Board of Revenue (FBR) began recovery proceedings against companies where courts had ruled in favour of the FBR.
The Large Taxpayer Office (LTO) Islamabad remained open late Saturday night to recover taxes from telecom companies after the ordinance was passed. Senior FBR officials also visited LTO Islamabad to oversee the recovery process.
The FBR was prepared to enforce tax recovery by attaching the bank accounts of two telecom companies under the LTO Islamabad jurisdiction. However, a settlement was reached, and the companies agreed to pay the recoverable amounts as per court orders.
In one case, a cellular company agreed to pay the due amount in billions to the FBR following an order from the Islamabad High Court (IHC). Another case, involving a telecom joint venture, related to the payment of withholding tax on mergers.
The IHC order stated that the inclusion of telecom companies in the definition of “industrial undertaking” by the Finance Act 2021 did not affect the tax year in question. As such, the FBR was justified in treating the tax collected on imported plant and machinery as minimum tax liability and disallowing the adjustment claimed by the company.
The company had claimed initial depreciation, normal depreciation on fixed assets, and amortization on intangible assets, but the assessing officer found these claims were not in line with the Income Tax Rules, 2002, and disallowed them.
The IHC ruling stated that the FBR’s decision to disallow the amount of Rs 868,089,293 was legally justified. The Appellate Tribunal Inland Revenue had appropriately applied the legal principles, and there were no legal issues with their decision.
The IHC also clarified that if a cellular company pays a tax imposed by the government, which is essentially the customer’s liability, it cannot treat the payment as its own deductible expense, even if the company recovers the amount from the customer.
