The Federal Board of Revenue (FBR) will take measures to improve revenue collection from telecom sector, particularly mobile phone subscribers, bringing maximum telecom services into the tax net.
Sources told Business Recorder on Thursday that the FBR would soon launch a large-scale exercise with the help of tax experts to conduct a study for increasing sales tax from telecom sector by broadening the tax base.
The data would be collected from various sources to ensure that the FBR gets corresponding increase in sales tax and other applicable taxes with increase in the volume of telecom activity. Other telecom services, not yet in the tax net, would be identified for broadening the tax-base.
The continuous and phenomenal growth in telecom sector has reached a stage where the number of mobile telephone connections has reached a level of 70 million with potential for further increase.
The board is interested to determine whether it is getting its due sales tax and other relevant taxes from this sector and its revenue has kept pace with the growth. With the help of tax experts, the board would conduct a study covering areas like, determination of actual amount of revenue collected, revenue mechanism, components of input/output tax, source and point of entry, regional comparison of the telecom sector.
The study will also establish services outside the tax net. Sources said that the study would further determine the revenue potential in respect of new services with sensitive analysis, along with identification of difficulties/ deficiencies of audit personnel in conducting meaningful audit in light of self-declarations.
During this exercise, the board would obtain list of telecom licensees from Pakistan Telecom Authority (PTA). On the basis of the list of all sales tax registered telecom licensed operators, the historical data would be retrieved for analysis of sales tax returns, filed by registered telecom licensed operators.
In consultation with the FBR, tax experts would obtain data from customs, PRAL, State Bank of Pakistan, PTA, Ministry of Commerce and Information Technology. Data would be also being collected from telecom operators' network sources, ie HLR, Intelligent Network platform and I.T.M.C etc.
Sources said that the sales tax registered telecom licensed operators would compare the data obtained from various sources to determine the optimum level of sales tax payable.
The experts would also review all services in the telecom sector, which should be in the tax net. In this regard, there is a need to identify the point of levy of the services to determine revenue potential therein and sensitive analysis in respect of new services.
The study would also identify difficulties and deficiencies of FBR Audit personnel in conducting meaningful audit in the light of self-declarations by sales tax registered telecom licensed operators. Sources said the FBR wanted to know whether it is getting its due sales tax and other relevant taxes from this sector.