Senate body tells Pakistan Telecommunication Authority to disqualify telecom firms for 3G licences
By: Sajid Chaudhry
ISLAMABAD: Senate Sub-Committee on Ministry of Information Technology and Telecommunication (MoITT) on Wednesday directed Pakistan Telecommunication Authority (PTA) to disqualify all the telecommunication companies involved in alleged Rs.47 billion tax evasion scam from participating in the bidding of 3G spectrum licenses.
The committee issued this direction after confession of the former Director General Large Payer Unit (LTU) Islamabad and present Member Inland Revenue Service Ijaz Hussain Shah that he was verbally pressurized by the former Chairman Mumtaz Haider Rizvi and Former Member Administration Raza Baqir to agree and sign letter dated June 30 on alleged deal.
The deal was made between former chairman FBR Mumtaz Haider Rizvi and telecommunication companies for allowing Rs.47 billion tax exemption on inter-connect charges over voice calls on different networks.
Member IR Ijaz Hussain Shah also informed the committee that despite his strong opposition to proposed exemption, FBR officials did not consulted him being DG LTU and reached a deal with telecommunication companies on the legal opinion of Sindh Revenue Board.
He alleged that telecommunication companies are involved in massive tax evasion through transfer pricing by inflating their import of machinery but these companies repatriate huge amounts to off-shore companies in the head of payment of inflated price of their imports to show the losses. He also said that one main telecommunication company is earning Rs.80 billion to Rs.85 billion annually and has paid only Rs.2.5 billion tax during last five years.
According to available records the conservative estimates evasion on inter-connect charges which are charged from the customers is Rs.26 billion and if default surcharge is included the amount is estimated at Rs.47 billion. And if the complete tax record is made available to FBR, the evasion might go further up may be over Rs.100 billion, Ijaz Hussain Shah said.
Chairperson Anusha Rehman and members of the committee observed that these confessions clearly indicate that tax policy is weak and flawed as big guns in the country are not paying due taxes whereas salaried class is being victimized. The committee raised the question that why companies are not contributing due tax in national exchequer while making hundreds of billions of rupees annually in Pakistan and why they are avoiding handing over their records and invoices if they are clean than.
IT also questioned Ijaz Shah that why he came under pressure on verbal orders of member administration and former Chairman FBR and why he did not recorded his reservations in writing on the request from the telecommunication companies. In case, the former chairman FBR denied such kind of allegations, than former DG LTU (Ijaz Hussain Shah) could be in trouble.
The committee heard the point of view of the former member IR Shahid Hussain Assad, Chief Income Tax Policy (ITP) Abdul Sattar Ohra and Secretary ITP Fahad Chaudhry who were transferred from their posts despite the clear directions of the NA body.
The chairperson sub-committee directed PTA to ensure availability of required records and invoices of telecommunication companies to know the legality of the tax on inter-connect charges.
PTA officials present in the meeting assured the sub-committee that they are legally empowered to obtain the desired records from telecommunication companies and would help FBR access to it. The sub-committee directed former and present Chairman FBR, former member administration FBR and representatives of the telecommunication companies to appear in Rs.47 billion tax evasion case on September 4. Chairperson issued strict directions that present and former Chairman FBR should make sure their presence in next meeting otherwise they would be summoned and assembly staff would be deputed to ensure their presence in the meeting.