Islamabad, The Chairman of Pakistan Economy Watch (PEW), Brigadier (retd) Aslam Khan, has called for stringent actions against a cellphone company implicated in a Rs98 billion tax fraud, highlighting a systemic issue of tax evasion and economic malfeasance within the country’s telecom sector. Despite previous measures such as freezing bank accounts and sealing business hubs, the corporation continues to engage in practices detrimental to the government’s and public’s financial interests amidst an economic crisis marked by inflation and near insolvency.

According to Pakistan Economy Watch, Brig. (retd) Aslam Khan pointed out that certain mobile phone providers are guilty of deducting more taxes from consumers than they remit to the government, a practice that has persisted due to lenient regulatory oversight on the telecom industry. He accused these companies of overcharging subscribers and exploiting loopholes in tax legislation, particularly in impoverished areas where some taxes are not applicable, yet consumers are illegally taxed, netting the companies substantial illicit profits.

The National Accountability Bureau (NAB) has previously accused five cellular companies of evading sales tax and federal excise duty totaling Rs 47 billion in 2012. Khan highlighted one major company’s egregious tax evasion, reporting annual earnings of Rs 80 billion to Rs 85 billion but paying a mere Rs 2.5 billion in taxes over five years. He also exposed the use of ‘transfer pricing’ and the inflation of machinery imports by some telecom businesses as tactics to dodge taxes.

The Federal Board of Revenue’s action in October 2020 against Jazz for failing to pay Rs 25.393 billion in income taxes underscores the government’s ongoing struggle with tax evasion in the telecom sector. Khan emphasized that while Pakistan welcomes international investment that contributes positively to society and the economy, fraudulent practices under the guise of business should not be tolerated, especially when the economy is in a precarious state.