Jazz Islamabad premises sealed by FBR due to 25B rupees in owed taxes

The telco believes that it is a matter of interpretation and it does not owe any taxes to FBR

The Federal Bureau of Revenue (FBR) sealed the offices of Jazz in Islamabad after the telco giant owed the authority more than 25 billion rupees in taxes. The action was taken by the large taxpayers’ unit of FBR. It is related to a PMCL subsidiary Deodar Private Limited, which acquired 13,000 towers during 2019.

“Tax amount is outstanding against the defaulter while the defaulter is refraining itself deliberately, dishonestly and without lawful excuse to discharge tax liability and thus causing huge loss to the national exchequer,” the LTU Islamabad order said.

A notice was served to the Principal Officers Pakistan Mobile Communication Limited (PMCL) Aamir Hafeez Ibrahim under Section 138(1) of the Income Tax Ordinance 2001 with a deadline to pay arrears of tax by 1:00 pm on October 28. Aisha Sarwari, the spokesperson for Jazz said that the company “has received a notice from FBR this afternoon. Jazz has made tax submissions based on legal interpretations of the tax owed. We will review and take measures under our legal obligations and will collaborate with all institutions for an early resolution of this issue.”

Jazz believes that under Section 97 of the Income Tax Ordinance, gain from the sale of an asset from a holding company to a subsidiary is not taxable. Shabbar Zaidi, one of the partners at Ferguson who also serve as auditors for Jazz, said that “this section needs to be properly interpreted, some problem has arisen with the understanding of this section.”

PMCL had appealed against the FBR decision with the Commissioner Income Tax in which the commissioner upheld the decision of the department. The company later took its case to the Appellate Tribunal of Inland Revenue and lost again. According to sources, FBR also went to banks to freeze the accounts of the company before sealing its premises.

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