DECEMBER 9, 2022

Adjustment by Wateen Telecom to reduce the Taxable Amount without any Legal Grounds --- Federal Tax Ombudsman (FTO) directed FBR to Review the Case

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Adjustment by Wateen Telecom to reduce the Taxable Amount without any Legal Grounds --- Federal Tax Ombudsman (FTO) directed FBR to Review the Case

 

Islamabad 11-11-2024: In a recent judgment, the Federal Tax Ombudsman (FTO) addressed a complaint regarding Wateen Telecom’s alleged issuance of an incorrect tax deduction certificate, sparking directives to examine the company’s compliance with tax laws. The complainant, a long-time Wateen customer and salaried taxpayer, sought a resolution after noticing discrepancies in his annual tax deduction certificate.

 

The case, filed under Section 10(1) of the Federal Tax Ombudsman (FTO) Ordinance, 2000, raised concerns over Wateen Telecom’s structural adjustment in September 2023. The adjustment separated the Internet Monthly Line Rent (MLR) into “internet” and “infrastructure” components, reportedly reducing the taxable amount and leading to a lower withholding tax deduction without clear legal justification.

 

The complainant’s attempts to obtain clarification from Wateen Telecom and the Federal Board of Revenue (FBR) were unsuccessful, prompting him to escalate the issue to the Federal Tax Ombudsman (FTO). The FBR’s representative argued that the agency lacked specific billing data to address the complaint, while Wateen Telecom maintained that the adjustment was procedural.

 

In its findings, the Federal Tax Ombudsman (FTO) determined that Wateen Telecom had failed to cite any legal basis for the exclusion of the “infrastructure” component from withholding tax obligations. Moreover, the FBR’s passive response to the taxpayer’s concern was deemed a failure of duty, with the Federal Tax Ombudsman (FTO) noting the tax authority’s responsibility to monitor corporate tax compliance.

 

The Federal Tax Ombudsman (FTO) invoked Section 2(3)(ii) of the Federal Tax Ombudsman (FTO) Ordinance, 2000, identifying FBR’s inaction as maladministration. As part of the judgment, the Federal Tax Ombudsman (FTO) directed Members IR-Operations and Policy to conduct a full review of Wateen Telecom’s practices in light of tax law and submit a compliance report within 45 days.

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