ISLAMABAD: The two telecom companies have agreed to pay outstanding taxes totalling Rs26 billion to the Federal Board of Revenue (FBR) instead of pursuing further litigation after losing a case in the Islamabad High Court (IHC).

The Large Taxpayer Office (LTO) Islamabad had decided to attach the bank accounts of the two telecoms before they could file an appeal against the court decision. The LTO remained operational on Saturday for the purpose of attaching the bank accounts of Telenor Pakistan and Deodar Pakistan, a subsidiary of Jazz.

Following the promulgation of Tax Laws (Amendment) Ordinance 2025, the FBR has started recovery proceedings and enforcement measures.

The FBR officials were preparing for a forceful recovery of taxes through the attachment of bank accounts of these two companies falling under the jurisdiction of the LTO Islamabad, as the head offices of both companies are situated in the federal capital.

Both companies had gone to court over tax on equipment import

However, a final settlement between FBR and the companies was reached late Saturday evening, as they agreed to pay the recoverable amount as per court orders.

Telenor Pakistan has recently lost a case against FBR for the payment of Rs6bn in terms of withholding tax in the Islamabad high court.

As the FBR started the process to attach the bank accounts, the top management of Telenor Pakistan agreed to pay Rs6bn in pending taxes against the import of plants and equipment instead of pursuing the matter in the courts.

Similarly, Deodar Pakistan was fighting a case against the FBR over the amount of withholding tax and recently lost the case in the IHC.

The FBR team working for the attachment of Deodar Pakistan bank accounts also agreed with the Jazz management to pay Rs20bn in terms of withholding tax against the import of plants and equipment.

Sources in the tax collecting body said that Jazz Pakistan has agreed not to carry the matter further in the courts.

Deodar Ltd is responsible for establishing and maintaining the company’s cell sites and telecom towers.

However, Jazz has sold Deodar to Engro Corporation and the deal valued at approximately $563 million has been allowed Jazz by the Competition Commission of Pakistan recently, but the deal has yet not been materialised due to certain legal formalities.

Companies’ versions

In separate statements, Jazz and Telenor have clarified their respective stances.

“It is clarified that neither PMCL nor its wholly owned subsidiary, Deodar, has received any adverse judgement in court, contrary to what was reported. As one of the highest tax-paying businesses in the country, PMCL has consistently fulfilled its obligations in accordance with the law. PMCL remains committed to compliance with applicable laws for all transactions, as and when required — always within the framework of the law and without compromising the rights and guarantees available under the Constitution of Pakistan,” a statement issued by Jazz said.

“Telenor Pakistan, as a law-abiding corporate entity and one of the largest contributors to the national exchequer, remains committed to complying with all applicable laws and regulations. We believe in resolving tax-related matters through the due process and continue to engage constructively with the relevant authorities. While discussions with the FBR are ongoing related to the tax demand, it is important to clarify that we reserve our right to pursue appropriate legal remedies as necessary,” said a separate statement issued by Telenor.

Note: This report has been updated to include the versions of both companies.

Published in Dawn, May 4th, 2025