ISLAMABAD (November 25 2006): The Central Board of Revenue (CBR) has started reconciliation of revenue figures of telecom companies, including mobile phone operators, with the Pakistan Telecommunication Authority (PTA) database to check the volume of duties and taxes paid by this sector.
Sources said on Friday the board has issued instructions to the collector, sales tax and federal excise, Rawalpindi to verify latest revenue collection data of the telecom sector with the PTA. This would enable tax authorities to verify collection with the help of information about each telecom company available with the PTA.
Presently, the CBR is actively working on three major tax-related issues of the telecom sector. First, pending refund claims of the Pakistan Telecommunication Company Limited (PTCL) and mobile phone companies. Secondly, processing of alternate dispute resolution (ADR) mechanism of PTCL. Thirdly, reconciliation of figures related to the telecom sector. Sources said last collector's conference discussed a number of issues relating to the telecom sector. The collector, sales tax and federal excise, Rawalpindi, highlighted these issues during the meeting.
The CBR has directed the collector, sales tax and federal excise, Rawalpindi to take immediate action on pending refund claims of the PTCL/mobile phone companies and pursue the ADRC cases relating to the PTCL.
Moreover, revenue collection figures relating to the telecom sector must be reconciled with the PTA data and any secret information apprehending evasion of taxes be also counterchecked with the PTA, instructions added.
During 2005-06, only 17 industries (commodity groups) contributed about 79 percent of total gross receipts of indirect taxes. In fact, more than half of this collection emanates from six items, including the telecom sector.
Collection of indirect taxes from the telecom sector was Rs 28.3 billion in 2005-06 against Rs 23.3 billion in 2004-05. The significant growth of 31.7 percent in sales tax domestic collection from telecommunication services in 2005-06 is attributed to the boom in the telecom sector, which is thriving at a tremendous pace.
According to a CBR analysis, the share of indirect taxes generated by the telecom sector in total federal receipts has increased from 2.7 percent in 2002-03 to 4 percent in 2005-06. On average, the indirect tax revenue has increased by 60.7 percent annually since 2002-03, the year when private companies started their operations in Pakistan, it added.