Telenor avoids to pay WHT of $39.5m against 10MHz 4G license purchase

KARACHI:  The Telenor Pakistan has total refused to pay 10 per cent Withholding Tax (WHT) amounting to $39.5 million and filed a petition in Islamabad High Court against government of Pakistan, Federal Board of Revenue (FBR) and Pakistan Telecommunication Authority (PTA).

After winning the 10MHz 4G license in the 850 MHz Band at the base price of $395 million as the sole bidder in a recently held auction,  the PTA has also asked the Norwegian giant Telenor to pay 38.5 million withholding tax.

The said auction was hastily announced by PTA when it was apparent that there would be little market interest in the said auction. It was merely an attempt to squeeze as much as possible the telecom sector for a huge sum prior to the national budget. The government could not fetch a sizeable amount due to the bad timing of the auction but ironically the sole bidder being the sole beneficiary refused to pay the legitimate 10 per cent WHT, hence another probable loss to the national exchequer.

The auction, prima facie, was seen as to favour the Norwegian company as it was apparent that no other telecom player will participate and the only bidder will be at the advantage to bid as close to the base price as it could. PTA is not exercising its right to cancel the bid for it being too low also hints at some desperation.

This is for the second time that Telenor has been awarded the license on base price, earlier it was when the first 3G/4G auction took place.

“Telenor moving a petition in court against the Government of Pakistan, FBR and PTA is very strange since the said tax was already mentioned in the Information Memorandum of the 850MHz 3G/4G spectrum auction by the PTA. Before bidding, Telenor must have highlighted the said issue with the relevant authorities instead of crying foul or trying to strong arm the government. What is even more intriguing is the fact that not only has Telenor Pakistan benefited from the timing of the said auction because of lack of interest by other competitors but has been able to secure the license once again at base price,” claimed an FBR official, speaking on the condition of anonymity.

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