Cellular companies: Whopping Rs47 billion tax waiver stopped at 11th hour
The Federal Board of Revenue (FBR) was on the verge of signing off on a massive waiver of Rs47 billion on outstanding taxes for five cellular service providers, but the move was intercepted by the country’s top anti-corruption watchdog.
FBR Chairman Mumtaz Haider Rizvi was interrogated for over two hours at the National Accountability Bureau (NAB) headquarters on Friday night and was allowed to leave the premises only after he agreed not to issue a notification to write off the outstanding amount, the head of the bureau’s media wing, Dr Ayesha Siddiqa, told The Express Tribune. The Rs47 billion includes a principal amount of Rs26 billion owed by five cellular service providers since 2007. FBR tax auditors had pointed out the discrepancy in 2010.
“The FBR chairman tried to convince FBR officials that the waiver is in line with the law and said he intended to grant it the very next day. However, he had to retreat once he was confronted with relevant evidence and supporting documents,” Siddiqa said. Rizvi himself denies being summoned by the bureau. “I did not have any meeting with NAB’s chairman or his staff recently,” Rizvi said.
Siddiqa accused Rizvi of giving false statements and said he did indeed meet NAB’s chairman Admiral (retd) Fasih Bokhri.
She added that Rizvi had refused to appear initially but agreed after the bureau threatened to issue an arrest warrant against him. Siddiqa added that NAB was committed to taking action against those involved in the case, including Rizvi, as the move would have resulted in a huge loss to the national exchequer. She said FBR officials had been warned against making such move earlier, too, but to no avail.
History
The cellular companies in question had first approached the office of the Commissioner Inland Revenue (CIR), which asked the companies to pay the tax. Following this, they went to the Appellate Tribunal Inland Revenue (ATIR).
The tribunal upheld the CIR’s decision and directed the cellular service providers to deposit the tax.
The companies, however, remain adamant not to pay the amount. They told the chief commissioner of the Large Tax Unit they were ready to pay interconnect charges applicable from July this year, provided the FBR waives off past liabilities worth Rs47 billion.
The FBR agreed to this offer. Though some reports alleged the FBR authorities of receiving incentives for the move, there is no evidence for such a suggestion. Siddiqa said it was too early to comment on the issue.
NAB’s chief has constituted a fact-finding committee comprising director-general (operations), director (special operations) and a senior banking officer of NAB to probe the matter. Siddiqa said NAB presently had no grounds to assert the FBR was illegally waving off taxes.
Mumtaz Haider Rizvi is already facing pressure to resign from his post, which he himself had promised to do after FBR failed to achieve last year’s revenue target by a whopping Rs65 billion.
Published in The Express Tribune, July 8th, 2012.
COMMENTS (23)
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@Sohail: Agree with you "This is Pakistan" The corrupts are enjoying all benefits, and others who could not pay their taxes (minor amounts) due to financial constraints will be held and no one will be allowed to bail them out. Their properties will be sold forcibly thru...... What about the next FBR chairman, he might have a go ahead from the Rizvi just to waive off taxes of those five companies and much more. If the chaiman was punished in a proper way no one would dare to repeat the waiver.
@David Salmon: The article states 5 telecom companies. There are only 5 telecos operating in Pakistan, so that means all of them are not paying taxes. <CrLf
The tax in question is the indirect tax (inter connect charges). It is a tax which has been collected from the consumer on behalf of the government and it's not some kind of tax on income and telecos have no right and no justification for evading them.
Just watch how mainstream media would turn a blind eye to this story. There would be no Kamram Khan or Hamid Mir delving into the story; there would be no Sana Bucha asking the 'Lekin' question. Last month the biggest cellular company of Pakistan faced the shame of sealing of its bank accounts as it was a tax defaulter of millions but our Media.... Media just was soooo cooooool about it. I don't know of any story running on airtime in any of the news channel about it.
@DAvid Salmon
These telecom giants are the major revenue providers for ALL media companies. So they can get away with murder!!! THIS IS PAKISTAN!
I would bet that the cell companies justify their billing rates the public has to bear because of high taxes they (cell companys) have to pay! ( Then make even more money by finding "WAYS" to get those same tax bills WRITTEN OFF)! Pakistan TV should make a prime time sitcom that jokes about the world class corruption that is rampant in Pakistan.
Well done NAD. Obviously the guy was going to be paid off and was about to forgive the cellular companies in order to pocket his bribe. am glad there is growing accountability in Pakistan which does not exist in Arab countries at all. I saw in Dubai and Gulf countries no one can question the rulers.
@romeo: You are right. These corrupt people must be hanged publicly. This kind of people have made this country so vulnerable.
Forgive me, I am an ignorant American lawyer, but why are the names of the companies involved omitted from the article? Is there a law or judicial order shielding them? Otherwise, I think it would very much in the public interest to reveal them, so that one could know whether we are discussing "telecom giants," as one comment says, or some bankrupt small cellular companies. In whose interest is it to censor their names, other than their own? What journalistic standard would treat a tax writeoff issue the same as that of a case of rape, where the name of the victim is usually omitted, rather than tthat of the alleged malefactor? There is something important missing from this article, imho.
salute to DG NAB and ET!
@saeed: Okay! Then you pay PKR. 47 billion. In addition, there is something known as the "Freedom of Information." If you want to expose and recover money from defaulters, then you have to expose them. This is now happening in Pakistan. Just the other day it was printed in the papers that the tax collection target of FBR for fiscal 2012, would fall short by PKR. 32 billion. Why is this amount still pending? Salams
For every Rs. 100 you load in your cell phone, you add Rs. 36 to national exchequer. These telecom giants are cash cows for Pakistan. Even if they don't pay Income Taxes on their own profits, they are instrumental in collecting such massive amount of taxes which are way more then total profits of some companies. Just to give you and example, PMCL (Mobilink) paid Rs. 30+ billion of taxes in 2011 while the total revenue of Fauji Fertilizer Company Limited was Rs. 22 billion in 2011 (after tax).
I think majority of comments have no clue what is all about. It's between cell companies and FBR. and the contract between them. Even press and media is not smart enough understand the contract requirement . So people stop making comments on every and any thing. especially negative one
Corrupt and shameless are too mild to describe this lot.
Chairman NAB is going to be in deep trouble. On a serious note, what he has done in this case is truly commendable.
Great news to hear. It is even better when you recognize not the names of people but rather institutions!
Has NAB's topnotch decided to follow Ch Iftikhar's path. If so, Alhamdolillah Pakistan is turning to institutionalization. Welldone CJ and welldone CM-NAB.
I am very sure he didn't get his share
Wow!
UN-bailable arrest warrant should be issued immediately against Mumtaz Haider Rizvi. He should be prosecuted and given a lengthy punishment for committing unpardonable crime against the country. If possible these kind of Rizvi's should be hanged in public for looting public money for their own selfish ends.
The personnel in the FBR are another name for putrescence in Pakistan. If taxes are outstanding since 2007, PKR 47 billion is a colossal amount ill afforded by Pakistan. Obliging irregularly is a common routine and sub-routine for them.
If the cellular companies want to leave, let them, but after paying taxes. Taxes of PKR 47 billion are an unavoidable amount and must be recovered even in installments. Almost everybody owns a cell phone and when mobile density is increasing, the cellular companies are minting money in Pakistan.
Administration and strict management of the FBR is needed. The Chartered Accountant companies that calculate their taxes should be put in the dock to answer for their clients. Waiving taxes owed from 2007 is an unhealthy sign. Well done NAB. God bless you. Salams
47 Billion!! If a common man doesn't pay 10,000 or even less as tax he get fined or even arrested with goods impounded. Will these 5 cellular companies be punished similarly? BAN THEM! and all accountable for allowing such tax evasion.