Facebook says it doesn’t need to register with PRA

LAHORE: A multinational corporation Facebook has told the Punjab Revenue Authority (PRA) in black and white that it did not need any kind of registration with the Authority to pay sales tax as they were operating from outside Pakistan, The News has learnt.

“Registration with the PRA is not applicable to us as we aren’t taxable in the country. We are providing our online services from Ireland from where the multinational corporation is operating,” a PRA official told this correspondent while quoting from the reply.

In fact, the PRA should apply the reverse-charge principle to the local recipients to collect tax for using the online advertisement services in Pakistan, he said.

The Section 4 (5) of the PRA Act 2012 describes reverse charge in certain situations.

“Where a taxable service originates from outside Pakistan but is received or terminates in the Punjab, the recipient of such service shall be liable to pay the tax to the government.”

The PRA had sent notices to Facebook, Google, Dailymotion and YouTube about two months ago, asking them to get their online advertisement business registered with the Authority in the Punjab, Pakistan. However, only Facebook responded.

The official said: “If Dailymotion, Google and YouTube did not respond, we will register these social media giants compulsorily under Section 27 of the PRA Act 2012.”

He said compulsory registration would enable the Authority to take legal action against all these companies which evade tax. The PRA claims on its official website that so far it has registered over 200 local businesses compulsorily in the Punjab.“After registering these companies, we would be able to approach the Pakistan Telecommunication Authority (PTA), requesting it to take action against the tax-evading websites/ companies including their blockage,” he added.

The official said currently the PRA had no enforcement powers, enabling it to take action against these tax-evading companies that didn’t exist in Pakistan physically.

The official said the Authority had also decided to introduce new amendments to the existing laws to empower the PRA to block such sites/ companies in Pakistan with the PTA’s help.

“We have prepared a draft of amendments which would be forwarded to the relevant quarters for approval within a month or so,” he added.

When contacted, PRA Chairman Dr Siddique Raheel confirmed the Authority had received an official response from Facebook.

“Yes, we have received a response from Facebook after almost three weeks and our legal wing is currently evaluating all reasons given in the reply.”

The chairman said the PRA believes that online advertisement services of Facebook are taxable under the law in Punjab, and the legal wing is evaluating all reasons given by multinational corporation.

“We want to bring such big companies to the table for negotiations,” Dr Siddique said when asked what action the Authority would take if the other multinational companies did not respond.