In a heated session of the Senate Standing Committee on Finance, telecom companies vehemently opposed the government’s decision to impose a 75% deduction on non-filers’ payments, labeling it as an illegal act and an undue penalty.
The meeting, chaired by Senator Saleem Mandviwala, saw representatives from telecom companies expressing their frustration over the new tax measures included in the finance bill. The telecom representatives argued that the government had unilaterally imposed these requirements without consulting the industry.
One representative stated, "The government has imposed its work on telecom companies without consultation. It is not our job to enforce tax compliance or block SIMs, which is the work of law enforcement agencies. We are now facing potential fines ranging from 10 to 20 crores if we fail to comply.”
The Federal Board of Revenue (FBR) had previously instructed telecom operators to block SIM cards of 5,000 non-filers. This directive has placed telecom companies in a difficult position, forcing them to act beyond their legal remit.
"We are being asked to deduct 75% from non-filers’ payments, which is neither our responsibility nor was it ever discussed with us. This is an illegal act and an illegal penalty,” the telecom representative added, noting that foreign investors are particularly concerned about these developments.
Senator Mohsin Aziz acknowledged the telecom companies’ grievances, emphasizing the severity of the penalties and the need to address their concerns. "The tasks assigned to these companies and the hefty fines proposed are excessive. Their arguments are valid, and their issues need to be resolved,” he said.
Senator Farooq H. Naik questioned the feasibility of the directive, asking, "How can mobile companies collect taxes from non-filers?” He criticized the approach, likening it to the "law of the jungle.”
During the meeting, the Chairman of the FBR defended the measures, explaining that Parliament had approved the requirements in the Finance Bill 2022. He stated, "Out of 240,000 identified non-filers, we have asked for the closure of 500,000 SIMs. Telecom companies, like all withholding tax agents, must comply within 15 days or face a proposed fine of Rs 10 crore every two weeks.”
Despite this defense, the telecom companies maintained their stance. "We cannot legally block anyone’s SIMs, and the condition to deduct 75% from non-filers’ payments is not permissible,” reiterated the representative, highlighting the ongoing tension between regulatory compliance and operational feasibility.
The session concluded without a resolution, leaving the telecom companies and the FBR at an impasse, while the Senate Standing Committee on Finance deliberates on the next steps.
