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Operators, FBR meeting soon: PTA intervenes in Rs47bn scam

August 07, 2012

ISLAMABAD/LAHORE, Aug 7: The Pakistan Telecommunication Authority on Tuesday finally decided to intervene in the case of the alleged tax evasion of Rs47 billion by telecom operators.

PTA intends to hold meetings with telecom operators and Federal Bureau of Revenue to resolve this issue as FBR has accused five cell phone companies of evading RS47 billion in sales tax on interconnection charges during the last five years.

“As a regulatory body, we have decided to call the meeting of operators and the FBR this week to discuss the issue and find out a solution after listening to both parties,” newly-appointed PTA chairman Farooq Awan told Dawn.

He said the operators had also filed a petition with PTA in this regard.

“The PTA can only give its opinion — who is right and who is wrong — after listening to the operators and the FBR,” the chairman said.

As FBR wrote to the National Accountability Bureau to look into the matter, the telecom operators also sought Prime Minister Raja Pervez Ashraf’s help to stop the bureau from harassing them. The issue stems a discrepancy between FBR and the operators as the latter believe that interconnection charges are ‘expenses’ not income under the Calling Party Pays (CCP) regime.

“The PTA has implemented the CPP regime to encourage subscribers to make and receive more calls, ensure penetration of mobile cellular service and to bring the calling regime in Pakistan in line with that followed in developed counties,” an official of a leading telecom operator told Dawn.

He said when a subscriber of a mobile network makes a call to another network then both (operators) charge for their service.

Under the CPP regime, the operators do not have to pay anything on the interconnection charges.

“The total tax on the telephone calls has already been deposited in retail mode. No tax is due on interconnect as tax has been collected/deposited on gross amount by each of the telecom operator from whose network the call was initiated. The FBR’s contention that tax should be paid in two parts by the calling party network and receiving party network is a mere procedural matter with no additional tax,” he says, adding there can be no double taxation on interconnection service.

On the other hand, the National Assembly Standing Committee on Information Technology also formed a sub-committee to investigate into this matter.

The five member committee under the chairmanship of MNA Anusha Rehman Khan was given the mandate to figure out details of allegations of the tax evasion.

Chairman of the Standing Committee on IT MNA Ch Muhammad Bajrees Tahir felt the need to form the sub-committee when members alleged FBR of harassing the cellular giants in Pakistan. A few hours after the sub-committee was formed, National Accountability Bureau also issued notices to the five cellular companies to appear before an investigation on Thursday.

It also gave three days to the cellular companies to pay outstanding dues along-with default surcharge and penalty.