Pakistan’s senate sub-committee of the Ministry of Information Technology and Telecommunication (MoITT) has notified the regulator to disqualify all operators that are involved in alleged PKR 47 billion tax evasion from participating in the upcoming 3G spectrum auction.

The committee issued the order after the former Director General Large Taxpayer Unit (LTU) Islamabad and existing Member Inland Revenue Service Ijaz Hussain Shah confessed that he was pressurized to sign a deal to agree that operators would not have to pay sales taxes on interconnection charges. He said that PKR 47 billion sales tax evaded over the past five years through inflating the prices of their equipment imports.

The telecom operators tried to bail themselves out by bringing forth the Pakistan Telecommunication Authority’s position that the interconnection charges are ‘expenses’ and not `income’ under the Calling Party Pays regime.

The committee directed the Pakistan Telecommunications Authority (PTA) to ensure the availability of records and invoices of telecommunication companies to ascertain the legality of the tax on interconnect charges. The five companies in the alleged tax evasion were earlier identified as National Telecommunication Corporation, Ufone, Telenor, Pakistan Mobile Communication, and Warid.

The five telecom operators claimed it to be a ‘propaganda’ campaign against them with regard to Rs47 billion taxes on interconnection charges.