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FBR admits inability to collect telecom data

Updated October 19, 2017

ISLAMABAD: The Senate Standing Committee on Finance expressed its dismay over the Federal Board of Revenue (FBR) for being unable to collect withholding tax (WHT) properly from telecom companies.

On Wednesday, the FBR representatives informed the committee that software and data collection of telecom sector was too complicated for tax officials to understand.

Member Operations, FBR, Khawaja Tanvir said that a software had recently been developed to acquire data of the telecom sector.

He said that currently there was no special audit of mobile telecommunication companies and the exercise to determine actual taxes applicable on them is being conducted after the directives of the Senate Standing Committee on Finance.

“Currently we get only the tax that they file themselves,” the FBR official said.

Answering a query by Senator Saud Majeed of PML-N, Mr Tanvir said that details show that some Rs4 billion withholding tax (Rs1bn each) is being collected by the four mobile telecommunication companies from consumers every month, but the same was not deposited with the FBR.

“You [tax authorities] have not collected Rs4bn for almost 7-8 years. Why has the FBR remained quiet for such a long time?” questioned Senator Majeed.

Senators Majeed and Mohsin Aziz observed that the FBR has always been harsh with industrialists and small taxpayers, but nothing was being done to tap available resources.

“This money is collected from the customers but why are the companies adding it to their own pool of resources?”

Four telecom firms collecting Rs4bn WHT every month, but not depositing the same with the tax authorities

Senator Kamil Ali Agha asked. He added that the amount should be paid directly to the FBR.

The FBR officials were unable to respond.

Senator Aziz said, “Withholding tax is collected in advance from the entities – simply look at their sales and calculate 12.5 per cent tax rate – at least you will know the approximate tax applicable on each company.”

However, despite repeating the same question, the officials failed to respond directly. However, they shared details about the complicated accounting procedures adopted by the telecom sector.

Chairman of the Committee, Senator Saleem Mandviwala said that FBR should rather outsource the audit of telecom and banking sectors as it requires special expertise and upgraded IT systems.

The committee gave two weeks to FBR to respond with updated information in this regard. The committee was also briefed by the National Accountability Bureau (NAB) about the Modarba scam engineered by a group of clerics who siphoned off around Rs22 billion from 31,477 claimants.

The case is in accountability court and NAB investigations are under way. Several arrests have been made in this regard, NAB officials added.

The committee was also informed by the Federal Investigation Agency (FIA) about a scam related to Abandoned Properties Organisation (APO). Officials of the APO, First Women’s Bank, National Bank and Habib Bank collectively defrauded APO’s money.

The FIA official informed that almost all the members in that group have been identified and booked, and a case was in the court.

Regarding alleged money laundering and corruption in Multan Metro Bus Project, the Securities and Exchange Commission of Pakistan submitted a 200 page reply to the committee.

Published in Dawn, October 19th, 2017