NAB asks telecom firms to pay evaded tax in three days

* Official says interconnect charges are not income and tax can be imposed on expenditures

Staff Report

Islamabad: The National Accountability Bureau (NAB) on Tuesday issued notices to five telecom companies and directed them to pay their sales tax along with penalty charges.

A NAB press statement read the companies were operating in the country and had to pay their outstanding taxes of Rs 47 billion on interconnect charges for the past five years. The telecom companies were allegedly involved in the sales tax evasion, the statement also read. NAB also said that if the companies failed to pay their taxes they would be dealt with according to the law.

NAB has also asked the Interior Ministry to put names of three officials of the Federal Board of Revenue (FBR) on the Exit Control List (ECL). The officials are former FBR chairman Mumtaz Haider Rizvi, Inland Revenue member Shahid Hussain Asad and Sales Tax chief Abdul Sattar. "Under Section 25(a) of the National Accountability Ordinance (NAO) 1999, NAB has highlighted the option of voluntary return (VR) to these telecom companies and has given a three-day deadline to pay their liabilities along with default surcharge and penalty as determined by tax authorities," the press release also read. On July 11, NAB summoned five telecom companies for recording of their statements in the case.

On July 26, the investigation team came across the startling information on payments of heavy fees to lawyers in the instant tax evasion case with assurance of positive results in favour of the companies. The telecom operators said that they would try to bail themselves out by bringing forth the Pakistan Telecommunication Authority’s (PTA) position that the interconnect charges were ‘expenses’ and not ‘income’ under the calling party pays regime. Reportedly, the five telecom operators had expressed their concern over what they claimed a ‘propaganda’ campaign against them with regard to Rs 47 billion tax on interconnection charges.

A PTA official said the PTA had declared the interconnection charges as expenses when the CCP regime was inked. The official said the interconnection charges were not income and tax could be imposed on expenditures. “Therefore, we do not see the operators will be penalised in this case at the end of the day,” they added.

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