Revenue board to collect WHT from cellular operators on real-time

KARACHI: The Federal Board of Revenue (FBR) has decided to collect withholding taxes from mobile phone operators on real-time basis, a senior tax official said on Friday, in a bid to thwart the irregularities involved in a delayed transfer.

“By the mid of September, the mobile phone companies will adopt a procedure for the online tax collection,” the officer said on condition of anonymity. The sources said the FBR and phone companies were evolving a mechanism to ensure accuracy in the tally of taxes collected from phone subscribers.

The FBR collected Rs47.65 billion as withholding income taxes during the fiscal year of 2015/16 as compared with Rs44.67 billion in the preceding fiscal year, showing a 6.7 percent growth.

However, the need of an online system emanated in the wake of the complaints that irregularities in the collection of withholding tax by phone companies were causing huge losses to national exchequer.

The FBR official said the phone companies agreed to provide details of the deduction against each number. The companies were, however, reluctant to provide all the numbers due to security reasons, the official said. He added that the companies were given the deadline of 15 September to hammer out the differences.

“The officials from FBR headquarters and representatives of mobile phone companies, Pakistan Revenue Automation (Pvt) Limited and Large Taxpayers Unit Islamabad are involved in the talks to achieve the desired results of real-time collection,” said the official.

The issue of irregularities in the withholding tax collection surfaced in early 2015. At that time, the FBR agreed to place an automated system by revisiting rules and procedure in coordination with the provincial revenue authorities and by proposing suitable amendments into the laws with the assistance of Pakistan Telecommunication Authority, the State Bank of Pakistan and other stakeholders, including mobile network companies.

The Federal Tax Ombudsman (FTO), citing the FBR, said the board had efficient rules and procedures in controlling the evasion in the telecom sector. In August last, the FBR also launched a withholding tax module for the enforcement of filing of withholding tax statements by telecommunication companies. 

The revenue body also told the FTO that a forensic audit of the terms of references of the telecom firms was to be carried out. It was decided that international consultants would be hired with the funding from the World Bank.

The revenue body assured the FTO of its seriousness in resolving the matter.  In this relation, a meeting between the FBR chairman, Member (Policy), Chief Inland Revenue (Policy), FTO and other officials was also held in May.