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November 3, 2020

Sealing Jazz premises to give wrong message to foreign investors: CEO

Top Story

November 3, 2020

ISLAMABAD: Chief Executive Officer (CEO) Jazz Aamir Ibrahim on Saturday said that there was a need to ponder why the FBR chose to take an extreme step over the interpretation of a tax issue against a company that is among the largest foreign investors and taxpayers in the country’s corporate sector.

“There can be a difference of opinion over the interpretation of a tax dispute that can be resolved amicably by sitting with each other across a table,” Ibrahim said. “But instead, the FBR decided to take an extreme step soon after our CEO met with the top leadership of the country to make a commitment for more foreign investment in Pakistan.”

The Jazz CEO added: “The FBR took this extreme step when our president had not even returned to our headquarters. We have been paying Rs 60 billion per annum in the shape of direct taxes, indirect taxes, license fees and other contributions on average in the last five- to six-year period,” the CEO Jazz Aamir Ibrahim said in an exclusive talk with The News here on Saturday.

He asked what kind of message was the FBR trying to convey to smaller companies by taking this extreme step; if the government could take such a step against the largest corporate entity, then no one would be spared. He was puzzled why the FBR took such a step when the CEO of the company had visited Pakistan just last week to assure the high-ups in Islamabad that it was considering investing more in Pakistan. However, such a drastic action was taken before the president had returned to his destination, making it hard for the company’s Pakistani team to convince them to invest more in this country.

Aamir Ibrahim said that Jazz had invested over $9.5 billion in Pakistan since 1994 and was investing around $250 million every year to expand its network. He said that the company paid Rs 60 billion into the national kitty per annum as direct and indirect contributions in the shape of corporate tax, license fees and other heads. Jazz, he said, is amongst the biggest foreign investors in Pakistan and is fully compliant with all its tax obligations. It has contributed over Rs 369 billion in taxes, license renewals, regulatory dues, and duties during the last six years, including Rs 47 billion as corporate tax. The company has also been the recipient of multiple highest taxpayer awards by the FBR, PRA and KPRA over the years.

He explained that earlier this week, the FBR had sealed Jazz’s head office over a disputed tax demand pertaining to the interpretation of a corporate reorganisation undertaken by Jazz in 2017. This is not related to general sales tax, withholding tax, or any tax collected from customers and the matter is sub-judice in the honourable court, he said. He quoted tax expert Shabbar Zaidi and said that you could ask him to ascertain whether our interpretation of section 97 was correct or not.

He went on to say that there could be a difference of opinion, but it was wrong to seal the company’s premises as it would give a wrong message to foreign investors. He said that the company was not running away anywhere so he could not understand the purpose of such an extreme step from the FBR.

He said that such a drastic measure against Jazz has tarnished the company’s corporate reputation and shaken investor confidence in Pakistan. “We find this choice of action coercive and unfortunate. It distorts the truth and shatters investor confidence. Seizing an office may be an appropriate response for criminals and extortionists, but not for a company that has served Pakistan's core economy for over two-and-a-half decades.”

The most challenging part of the last few days is the disappointment of the company’s staff, he added. Many professionals, from engineers to designers, put in endless hours of hard work into our digital products and services. The 11,000 people who have been part of the workforce care for the company’s reputation.

“Uninterrupted telecom and 4G services have been our promise, and we have kept it, despite Covid-19 lockdowns, regardless of disruptions to our tower fuel supplies during Karachi’s torrential rains. Even now, with the office closure, Jazz continues to serve and connect the country,” he said.

According to GSMA, Pakistan has the lowest telecom tariffs and the highest taxes in the world. “Our room for growth benefits the government, related industries and the ordinary person. Yet policy regimes block business growth and maintain unpredictability. Pakistan ranks lowest in terms of Internet readiness in South Asia. As someone who works hard to call investors to Pakistan, I find the regulatory environment standing at the opposite end of our national ambitions”.

If we truly want a Digital Pakistan, a change in the unilateral approach is necessary, he said, as is the need to call out authority abuse. “My responsibility as a Jazz leader is not something I take lightly. The focus I have is to ensure steady progress of 4G, mostly to reduce Pakistan's wealth gap. We have over 22 million 4G users yet we feel that real success is about bringing 100 million more Pakistanis online, inshallah.”

Despite the challenging business environment during the Covid-19 pandemic, Jazz invested Rs 28.9 billion in 2020 alone. “Nothing changes as far as our commitment to lead Digital Pakistan. The laws of the country in letter and spirit will continue to be paramount to us. Having said that we will not be bowed down by the wrong interpretations of the law.”

The CEO said that Jazz seeks an amicable resolution through dialogue to conclude the matter on merit and with the right interpretation. Despite these challenges, he said, Jazz assures the provision of uninterrupted services to its over 64 million customers.