All taxes collected by mobile phone companies suspended

Kalbe Ali Published June 14, 2018

ISLAMABAD: Under the directives of the Supreme Court, the tax authorities have suspended all taxes collected by mobile phone companies with effect from June 14.

All amounts charged at cellular networks either for the internet or mobile telephony will be reflected in the balance of the customers from midnight between Wednesday and Thursday.

However, the court directives are applicable only for two weeks as the Federal Board Revenue (FBR) will present its report on the revenue impact of the decision after that period.

The decision has been announced by a three-member bench of the apex court headed by Chief Justice Mian Saqib Nisar and comprising Justice Umar Ata Bandial and Justice Ijazul Ahsan, in a human rights case.

The order said that after hearing all sides the court was of the view that withholding tax, sales tax and service charges have not been validly and legally imposed.

It said that the tax authorities as well as the mobile companies will file a detailed report about withholding and sales taxes levied on non-taxable individuals — the poor people who were earning below the taxable income.

The court also said that the companies were not entitled to collect service charges from their customers, and the decision in this regard will be made in the final order.

Currently, when a customer charges an amount either for mobile telephony, which includes voice service and SMS, or for the internet services 12.5 per cent withholding tax is levied by the FBR. At the same time 10pc service charge is deducted by the mobile company from that amount.

Besides, 19.5pc General Sales Tax is levied on every call and on the usage of internet service.

The mobile companies have uploaded the following message at their websites: ‘Dear Customer, pursuant to Order of the august Supreme Court, – (company) suspends deducting all previously applicable taxes as well as Service Fees on every prepaid customer on purchase and usage of services including recharge of customer account with immediate effect throughout Pakistan. However, this will not have effect on AJK & GB’.

The SC order is not applicable to Azad Jammu and Kashmir and Gilgit-Baltistan because certain FBR taxes have not been levied in those areas.

Published in Dawn, June 14th, 2018

Newspaper

Kalbe Ali is a senior staff reporter for Dawn based in Islamabad, with nearly 20 years of field reporting experience. He covers a diverse range of topics, including the internet, IT and telecom sectors, as well as religious affairs.

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Awan Sahib

Jun 14, 2018 10:57am

Pakistan will lose 123 billion revenue because of this single decision. The country is celebrating the decision , but do they know that it will have disasterous consequences in the near future. We will now have to borrow atleast 1 billion US Dollars annually to compensate for this revenue loss. Popular decisions sometimes are not logical and rational.But alas our people dont understand that.

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Shaukat Ali Khan

Jun 14, 2018 12:14pm

So, the government will lose tax amount at a crucial period.

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Engineer_

Jun 14, 2018 12:58pm

Taxes are collected for government. Telecom is one of the few areas where luckily government is able to get something. But CJP with mere populist approach is denying state to have such taxes with blanket order. What a loss to nation. Who will fill it? IMF? Asian Dev Bank? or he wants to create business case for someone else? Mobile phone usage both for data and for conversation is a luxury. In all parts of the world, luxury items are for sure subject to higher taxation. Instead of denying taxes, he should have implemented clarity on operators to give full transparency to each customer for every easyload/scratch card credit that where that 100 Rs disappeared- under which package their loaded money got disappeared. By the way phone calls are still very cheap in Pakistan as compared to different countries of the same group. One must take into account also the socio effect of it as well. Now worthless user will have more worthless usage & gov.of Pakistan will be the looser. Bravo CJP

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Shahid

Jun 14, 2018 01:13pm

For how many years have these taxes charged? Suspension for only two weeks? Does it even make sense? These companies must be audited whether or not they have passed on, even if wrongly withheld/collected monies in the named of named tax activities to government departments in full? Most likely they may not have.

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Usman

Jun 14, 2018 01:44pm

This is direct relief for the poor people

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BAXAR

Jun 14, 2018 02:12pm

@Shaukat Ali Khan "So, the government will lose tax amount at a crucial period." One day or another, the government will have to tax the rich or face starvation. No government can endlessly run on taxes collected from the poor. If the supreme court doesn't stop them, nature will. The largess shown by the nature is coming close to end.

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khan

Jun 14, 2018 03:19pm

They need to give customers detail of their packages in for of bill

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Iqbal Hussain

Jun 14, 2018 03:39pm

The taxes of mobile recharge are too much. There should be nominal tax that can be bear by people of all income. SC decisions is a consequence of greed of government and communication companies. If they had adopt a balance policy then there won't be need of such jurisdiction by SC.

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hussain684

Jun 14, 2018 04:42pm

Yes there is a loss in terms of revenue collection but the government is charging from poor and rich alike. Govt must devise alternate tax on the riches only to compensate for this

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