IHC Backs FBR, Orders Rs22B Telecom Tax

Islamabad, June 13, 2025 — The Islamabad High Court (IHC), led by Justice Babar Sattar, has delivered a landmark ruling backing the Federal Board of Revenue (FBR), affirming its power to assess tax liabilities on high-value intra-group transactions, specifically a telecom operator’s 2018 transfer of tower assets worth Rs98.5 billion ($940 million) to its subsidiary, media reports confirm. The court ordered the telecom operator to pay Rs22 billion ($78 million) in taxes on a recorded gain of Rs75.9 billion, rejecting its claim of tax exemption under Section 97(1) of the Income Tax Ordinance 2001 (ITO) for intra-group transfers.

The IHC ruled that tax neutrality under Section 97 requires an unchanged written-down value, not the fair market value of $940 million accepted by the operator, deeming the gain a taxable event. The court also upheld the commissioner’s authority to factor in accounting income for taxable income. FBR Chairman Rashid Mehmood Langrial, alongside Mir Badshah Khan Wazir and Dr. Ishtiaq Ahmed Khan, led the legal victory, strengthening FBR’s stance on corporate tax compliance. In a related move, the IHC dismissed the operator’s Federal Excise Act, 2005 petition and imposed a Rs100,000 fine payable to the Deputy Commissioner-IR, LTO, Islamabad.

This ruling bolsters FBR’s fight against tax avoidance in complex transactions, boosting Pakistan’s tax revenue. Web context highlights Pakistan’s tax collection gaps (e.g., 9% of GDP, web ID: 0), while X posts show mixed views—some applaud FBR success, others question corporate burden. Critically, the narrative of “enforcement” may mask legal ambiguity—web sources note tax code disputes, and X sentiment suggests distrust in fair application, hinting at potential backlash.