Home »Taxation » Pakistan » Flight of dollars: Senate body asks FBR to probe into mobile firms’ data
The cellular mobile companies operating in Pakistan are parking dollars outside the country in the guise of royalty, technical fee and equipment imports and Federal Board of Revenue (FBR) should investigate mobile company's data to check this flight of dollars.

These directives were given to the Federal Board of Revenue (FBR) by the Senate Standing committee on Cabinet Secretariat which met with Talha Mehmood in the chair here on Thursday.

Mehmood said if mobile companies are going in loss and are earning little profit, how they have been working for so long. He directed Member Inland Revenue FBR to check and investigate how dollars are being sent abroad.

The FRB officials said that Rs 75 billion are outstanding against cellular companies as they have taken stay orders from high courts. The outstanding amount was Rs 150 billion; however, the FBR recovered Rs 50 billion after getting some stay orders vacated.

He further said that 3 out of 4 cellular companies have shown profit of Rs 25 billion each for the first time and deposited Rs 7 billion in taxes so far. Mobilink profit after taxation in 2018 was Rs 26.556 billion, Telenor profit after taxation was Rs 19.548 billion, Ufone profit after taxation remained Rs 2.120 billion and profit after taxation of CMPak was Rs 897.486 million.

Member Inland Revenue Seema Shakil said that as per their declaration of last five years, Pakistan mobile communications players in most of their return declarations declare losses and pay minimum taxes. On average mobile companies import equipments worth Rs 20 million annually, the FBR official added.

The committee chairman said that major irregularities are taking place in imports of equipments where an item worth one million rupees is shown as being imported at ten million rupees in opening LCs and in this way dollars are being parked outside the country. He further said if Warid was going into losses, how Mobilink acquired it. If they are going in losses then why they are lobbying for bid fee and licence renewal, Mehmood added.

The committee chairman directed FBR officials to take time, check the matter and stop dollars going out of Pakistan.

Pakistan Telecommunication Authority (PTA) submitted in written that out of the total five companies five years earlier, one being not feasible has been merged in another to get economies of scale and maintain subscribers base, presently only two companies who have big subscriber base are in net profit after all expenditure and taxes, the other two companies are either still in losses or have shown very meager profits, despite turnover of billions of rupees. There is need that subscriber base should be increased in such a way that economy of scale is reached while expenditure and investment may be kept at present level, or only increased to a tune which is in line with increase in subscriber base so that sustainability is maintained.

The committee also took agenda regarding awarding of a contract by PTA for monitoring of internet traffic to a company working as a partner with Israeli intelligence agency.

Senator Mushtaq said that the agreement might have been with the US firm but Israeli secret agency's involvement in all this could not be ruled out. He read out from the report that the NSO Group Technologies is an Israeli technology firm focused on cyber intelligence and was part of a controversy, as its technology was alleged to have been used to spy on Turkish citizens. The committee chairman said that the same firm was involved in hacking the data of 1.5 billion customers as per a BBC report.

He said that Francisco Partners is parent company while NSO and Sandvine Inc are sub-companies. The committee directed chairman PTA to investigate the matter as it is a sensitive issue and report to the committee.

Chairman PTA Major Gen Amir Azeem Bajwa (retd) informed the committee that PTA has neither signed any contract for monitoring of internet traffic with any vendor nor is spending public money on the project.

He said telecom industry has signed an agreement with Inbox Business Technologies to deploy 'Web Monitoring System (WMS),' a suitable technical solution capable of monitoring, analysing and curbing grey traffic.

All LDIs (long distance and international), CMOs (cellular mobile operators) and submarine cable landing station licensees are sharing the cost of the system under their regulatory obligations.

For addressing security concerns, the PTA has obtained undertaking from the vendor (Inbox Business Technologies) and manufacturer company Sandvine Inc USA for any possible involvement of hostile element. The vendor is also obligated to get the system certified as per ISO 27001 international standards.

Moreover, security agency has been involved to conduct security audit of the system to find out any loopholes and vulnerabilities in the system. To further ensure the security, a strict clause about system and material breach is included in the contract. In case, any such breach is identified and validated, contract will be terminated, he added.

The DIG Headquarter Islamabad Police while briefing the committee on safe city project said that around 200 cameras are not working due to one or other reason. He further said that the project has been helpful in reducing the crime ratio.

The committee chairman observed that Huawei company has not fulfilled its obligation despite advance payment in the project and needs to be blacklisted and their technical evaluation of the project needs to be conducted before handing over the project to Islamabad police.

The committee expressed serious concerns over no-service or poor mobile services in areas like Hazara Division from where CPEC route will pass. The chairman PTA said that in the licence renewal, rollout and quality of service obligations have been upgraded and the areas would be covered with data and voice coverage soon.

Copyright Business Recorder, 2019


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