Tax authorities on Thursday seized all bank accounts of Mobilink until it recovers Rs8.6 billion, an amount the country’s largest cellular service provider collected from customers in form of taxes but did not deposit in the national exchequer.
“All bank accounts of the company have been attached and imports blocked accordingly and further action will be taken by the next working day,” FBR announced in a statement.
An official of the FBR told The Express Tribune that FBR in the next step will seize the company’s head office and regional offices. The move is one of measures the tax authority is pursuing to achieve this year’s revenue target of Rs1.952 trillion. Federal Board of Revenue took the drastic step after the Income Tax Tribunal upheld a decision of Large Tax Payer Unit, sustaining the decision to recover Rs8.6 billion from Mobilink.
It was the second controversial decision taken in less than 24 hours, as FBR earlier waived off penalties and surcharges imposed on withholding agents for illegally withholding tax deducted from taxpayers but did not deposit in the kitty.
From July 2011 to April 2012, the FBR collected Rs1.42 trillion in taxes and has to bag another Rs528 billion in the remaining two months to reach its target. Unofficially, the target has been revised to Rs1.928 trillion, according to an FBR official.
According to the FBR, Mobilink owed Rs8.6 billion to the exchequer on account of misdeclaration of Sales Tax and Federal Excise Duty. It said that the Income Tax Appellate Tribunal recently upheld the decision of the LTU, Islamabad and confirmed the payable tax amount of Rs8.6 billion.
After the Tribunal’s decision, the tax authorities formed various teams to recover the amount from the company through attachment of bank accounts, blocking of imports and recovery through suppliers of the company, which include other telecom companies as well as the Pakistan Telecommunication Authority.
“There is some misunderstanding at some stage and we are seeking clarifications from the FBR,” said Mobilink spokesperson Husain Ali Talib. The company would soon issue a statement after seeking clarifications from the FBR, he added.
In the official statement issued later in the day, Mobilink said that the FBR’s ruling on Sales Tax and FED is still sub-judice. Mobilink is one of the largest corporate tax payers in Pakistan, and has always remained at the forefront of making its due contribution to the nation’s exchequer, adds the statement. In 2011 alone, Mobilink paid taxes amounting to Rs34 billion.
The FBR issued two separate statutory regulatory orders on Thursday aimed at reducing tax liabilities of various sectors. After struggling for at least a year, the FBR through SRO 549, reduced minimum tax rate by 50% for those motorcycle dealers who clear their outstanding liabilities by June 30, 2010. Similarly, to motivate default dealers, the FBR has lured them by waving off 75% of the payable tax for the current fiscal year provided they deposit the amount before the end of the current financial year and help reach its tax collection target.
The FBR also announced amnesty for steel melters and re-rolling mills through SRO 550 on Thursday.
For those who did not meet their tax liabilities last year, the FBR has reduced minimum turnover tax to 0.5% or Rs280 per ton, whichever is higher, provided the melters deposit the amount by June 30. For 2008 to 2010, the withholding tax rate on purchase of steel scrap has also been reduced to 1% or Rs300 per ton.
For 2011 and 2012, the rate of withholding tax on purchase of steel scrap will now be 1% of value of purchase or Rs400 per ton provided the amount is deposited before end of the fiscal year.
For steel re-rolling mills, the rate of minimum tax on turnover is reduced to 0.5% of turnover or Rs315 per ton, provided the millers deposit the outstanding liability of last one year by end of this month.
Similarly, for fiscal years 2008, 2009 and 2010 the rate of withholding tax on purchase of ingots and billets will be 1% of the value of purchase or Rs450 per tons provided they deposit the amount before close of fiscal year.
Published in The Express Tribune, May 25th, 2012.