Telenor challenges additional tax on spectrum

29 Jun 2016

Norwegian-backed cellco Telenor Pakistan has challenged the government’s imposition of a 10% sale tax on its recent award of 850MHz spectrum, ProPakistani reports, citing a petition filed by the operator with the Islamabad High Court. The spectrum was auctioned earlier this month and, as the only operator to submit an offer, Telenor won the tender with a bid of USD395 million. The cellco has deposited half of the spectrum fee and had agreed to pay the remainder in five equal instalments, but the Pakistan Telecommunication Authority (PTA) has withheld the concession until Telenor pays advance income tax of USD39.5 million, or 10% of the total auction price. According to the Norwegian-owned provider, the Federal Board of Revenue (FBR) has ‘grossly misinterpreted and twisted the law’ and the deduction of withholding tax of 10% of the gross sale price is unlawful.

In its petition, the cellco explained that the transaction cannot be called a ‘sale’ as there has been no transfer or property, pointing out that: there is no property to transfer, no current owner (it states that the government does not own the frequencies, only the right to control the resource) and no transfer of title. Further, the licence does not grant Telenor any proprietary rights, only permission to use radio spectrum.