Islamabad High Court orders telecom giant to pay $78 million in taxes

A division bench of the Islamabad High Court (IHC) led by Justice Babar Sattar ruled in favor of the Federal Board of Revenue (FBR) in a high-profile tax case involving a major telecom operator, ordering the company to pay approximately PKR 22 billion ($78 million) in taxes, according to a statement from FBR on Thursday.

The case centered on a 2018 intra-group transaction in which the telecom operator transferred its nationwide tower infrastructure to a wholly owned subsidiary for PKR 98.5 billion ($940 million).

The operator recorded an accounting gain of PKR 75.9 billion but argued the transaction was tax-exempt under Section 97(1) of the Income Tax Ordinance, 2001, which allows tax-neutral treatment for intra-group transfers under certain conditions.

The court rejected this argument, ruling that the transaction violated Section 97 because it was conducted at fair market value, generating taxable income. The bench held that the FBR had the authority to assess tax liability based on the accounting gain and affirmed the commissioner’s jurisdiction in determining taxable income.

In a related case, the court dismissed a separate petition by the same operator challenging a show-cause notice under the Federal Excise Act, 2005, and imposed a fine of PKR 100,000, payable within four weeks.

FBR Chairman Rashid Mehmood hailed the verdict as a step toward Prime Minister Shehbaz Sharif’s goal of expediting revenue recovery. The FBR’s legal team, led by Member (Legal IR) Mir Badshah Khan Wazir and Director General (Law) Dr. Ishtiaq Ahmed Khan, successfully argued the case with representation from Advocate Supreme Court Asma Hamid.