Govt, telecos agree on 10pc advance tax on 3G auction

ISLAMABAD - The government and telecommunication companies on Wednesday finally landed at same page on removing the ambiguities on payment of 10 percent advance tax on the auction sale price of 3G/4G spectrum, which would pave way for licence issuance ceremony.
It is mandatory that telecommunication companies have to pay 10pc advance tax under Section 236A of the Income Tax Ordinance 2001 on the auction sale price of the spectrum. However, the telecommunication companies were reportedly reluctant to pay ten percent advance tax on the auction sale price of 3G/4G spectrum. Therefore, the licence issuance ceremony was delayed.
However, the Finance Minister Senator Ishaq Dar on Wednesday held a crucial meeting with Chief Executive Officers (CEOs) of the Telecommunication Companies namely Mobilink, Zong, Telenor and Ufone. Both the sides have resolved the issue of advance tax. The government is expecting to generate tax worth of Rs 20 billion through the auction of 3G/4G spectrum auction. However, the government would collect Rs 10 billion by June 30 2014, as mobile companies would have to pay 50 percent of the auction amount. The money generated through the auction will be deposited into the federal consolidated fund after deducting FBR’s taxes. Sources informed that government and telecommunication companies might sign the ‘licence issuance ceremony’ on May 17, 2014, which is World Telecom Day. The government held the auction of 3G/4G licences on April 23 2014, which generated Rs 110 billion for the government.
Meanwhile, according to the official handout release here, Finance Minister Senator Ishaq Dar said that it is mandatory that the telecommunication companies have to pay 10pc advance tax under Section 236A of the Income Tax Ordinance 2001 on the auction sale price of the Spectrum. The telecommunication companies expressed their agreement to follow the law and make payments due under the law. The Finance Minister congratulated the winners of the spectrum auction and said that the government will provide all necessary guidance and assistance to reap the benefits of new technology just rolled out in the country. He said that we are satisfied that the auction process was completed in the best transparent manner duly recognised globally and the country is now moving forward for the development of the necessary infrastructure which will result in creation of 900,000 employment opportunities in the next few years.
The Finance Minister complemented the CEOs, on his own behalf and on behalf of the Government of Pakistan, of the successful winners of auction of 3G/4G spectrum. He said that we want to facilitate international investors and provide them an environment which is conducive to economic activity in the country. He hoped that the telecos will work for telecommunication development in the country. He emphasised on developing areas like E-health, E-commerce and E-education and many more other fields.
The CEOs expressed their appreciation for transparency and fairness during the whole process and said that it will contribute technological resources to Pakistan’s socio-economic sectors. They observed that spectrum auction will further add to the renewed confidence of the international investors in Pakistan’s economic policies. They resolved to introduce new technology, local based telecom industry and to provide maximum service benefits to the consumers as a result of spectrum auction.
Finance Secretary, Chairman PTA, Chairman FBR and senior officials of the Finance Ministry were also present in the meeting.

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