Islamabad, August 27, 2024 – In a recent session of the National Assembly, the Minister for Parliamentary Affairs, Azam Nazir Tarar, clarified that mobile companies in Pakistan are not authorized to increase tax rates independently.
This authority rests solely with the Federal Board of Revenue (FBR) or the relevant provincial tax authorities, ensuring that any adjustments to tax rates are under government control and not at the discretion of private entities.
During the Question Hour on Monday, Minister Tarar responded to inquiries concerning the tax rates applicable to mobile companies. He emphasized that the power to set or alter tax rates lies exclusively with the FBR or provincial tax authorities, depending on the jurisdiction. “Mobile companies cannot increase any tax rates unless notified by the FBR or relevant provincial authorities,” he stated, reinforcing the regulatory framework governing tax administration in Pakistan.
Minister Tarar further explained that there have been no changes in the tax rates for mobile services in the recent past, except those introduced through the national or provincial budgets. “Tax rates for provincial or national taxation are the same for all mobile companies, and all such collections are deposited to the relevant revenue authority,” he noted. This uniformity in tax rates ensures a level playing field for all mobile operators and consistency in revenue collection.
He elaborated on the process of tax collection from mobile users, clarifying the mechanism through which taxes are applied to different transactions. “Tax is charged according to the process defined by the relevant tax charging authority of the Government of Pakistan,” Tarar explained. This process involves charging tax on both the recharge of mobile credit and the usage of mobile services.
He noted, “Recharging is considered a separate activity, and the use of service is different. Accordingly, a further charge of tax is made as the service is being used.” This distinction ensures that taxes are applied fairly based on actual usage and transactions, aligning with the directives of the respective revenue collection authorities.
Minister Tarar also highlighted that the charging mechanism employed by mobile companies is in strict accordance with the instructions issued by national and provincial revenue authorities. “Tax rates are circulated by the relevant revenue authorities, and mobile companies have nothing to do in this respect,” he stressed. This statement reinforces the fact that mobile operators are simply intermediaries in the tax collection process, with no authority to modify the rates or the method of application.
He assured the National Assembly that mobile companies are obligated to adhere to the tax rates as soon as they are promulgated by the authorities. “As soon as these rates are communicated, mobile companies are bound to charge, collect, and deposit such tax on the ratio as notified by the relevant authorities,” Tarar stated. This binding requirement ensures compliance and transparency in the collection and remittance of taxes, safeguarding the interests of both consumers and the government.
The minister’s remarks come amid concerns from some quarters about the transparency of tax collection practices by mobile companies. His statement aimed to clarify any misconceptions and reassure the public that the government closely monitors and regulates tax rates through the designated authorities.
