Recovery drive: Mobilink bank accounts locked down

Published: May 25, 2012

GOVT’S CUT: Rs34b is the amount Mobilink paid in form of taxes in 2011.


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.

Controversial relief

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.

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Reader Comments (12)

  • Not me
    May 25, 2012 - 8:43AM

    Why not freeze accounts of PIA who are not depositing FED deducted into government accounts???


  • Humayun
    May 25, 2012 - 11:54AM

    Very well done FBR – in the context of our image and public perception, you have only scared away the investors


  • Loony toon
    May 25, 2012 - 11:59AM

    So moral of the story pay taxes get accounts seized don’t pay and get off Scott free


  • Baba Ji
    May 25, 2012 - 12:23PM

    Dang it … someone tell me please it is not going to affect my “Jazz Chota Bundle Offer” !!!


  • Omer
    May 25, 2012 - 2:43PM

    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.

    The date is June 30, 2012. Please correct.


  • Zavia
    May 25, 2012 - 3:09PM

    @Baba Ji, It was humorous….


  • Bilal
    May 25, 2012 - 4:07PM

    MNCs are easy targets! Go after local giant political personality owned businesses and I’ll really be impressed!


  • Saad
    May 25, 2012 - 5:27PM

    So, are all you guys saying that FBR has done wrong here ?? That surprises me … The 8.6 billion are the money you and other consumers have paid. They should go to the Government, no questions about that.


  • Mehreen
    May 25, 2012 - 11:07PM

    Its actually funny how anything govt or its agencies does these days invites the ire of the public…Hello people open your eyes, Mobilink didn’t deposit the withholding tax that they deducted from consumers…it doesn’t matter whether they paid 36 Bn tax in a year, or whether they are a multinational or foreign investors..they did a wrong and they should pay for it..


  • Muneeb
    May 26, 2012 - 5:37AM

    Very good move, hope to see with other key players as well.


  • May 26, 2012 - 12:47PM

    WTH! Where Mobilink has been using this large amount of funds? Was it being used for ad campaigns?


  • May 30, 2012 - 4:59PM

    Hello All, why FBR suffers loose motion when imposing such panalties on Political big shots, its a humour our respected leader nawaz sharif paid just rs.5000 in last yr the man owning an assets in billions of billions. Do FBR asked from our respective president and prime minister or any ministers.. regarding wealth tax reconciliationa nd audits.
    Do any one think , that tax fight between FBR and PMCL may be due to double taxation which will go on. Did FBR asks our big shots to disclose their assets in foreign and national ? we as a nation are nothing , its no matter PTA or Mobilink its all about ethics,. thatswhy someone very well said that ” pakistanis are barbarians and bigger barbarian are those who are rulers of this land” may Allah bless my country and country men.Recommend

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