ISLAMABAD, Sept 13: The Federal Board of Revenue and mobile phone companies have agreed to reach out-of-court settlement in a case of Rs47 billion tax evasion within a month.
A sub-committee of the National Assembly Standing Committee on Ministry of Information Technology facilitated the accord at a meeting presided over by Anusha Rehman Khan of the PML-N at the Parliament House here on Thursday.
FBR Chairman Arshad Ali Hakeem, CEOs of mobile phone companies and officials of the Pakistan Telecommunication Authority attended the meeting.
But the meeting decided that the National Accountability Bureau would continue to investigate the criminal aspect of the case to determine if kickbacks were involved in allowing tax exemption on inter-connect charges.
The CEOs of mobile companies and their tax advisers told the committee that they had challenged a decision of the FBR’s tribunal in the Lahore High Court.
Now, the LHC will decide that if the FBR has powers to conduct audit without having a harmonised code and how it is charging tax on inter-connect charges.
According to the agreement, the mobile phone companies will submit an application in the LHC for an out-of-court settlement through the Alternate Dispute Resolution mechanism.
The FBR will not be allowed to use coercive measures for making tax collection, if permitted under the law, and mobile phone companies will provide the required record, including interconnect charges invoices and billing along with details of their annual audited accounts for examination by FBR officials, to find out the volume of tax evaded if it was due.
It was recommended that the FBR should have clearly defined tax regime for these companies and charge no tax under the head of ‘others’.
The case will be settled before the bidding for the auction of 3G and 4G Spectrum expected by the end of the year. The sub-committee has warned that tax defaulters among mobile phone companies will not be allowed to participate in the bidding.
Anusha Rehman directed the FBR to resolve the issue without using pressure tactics.