FBR Freeze Threat Forces Telenor, Jazz Subsidiary to Pay Rs26 Billion

ISLAMABAD: Two major telecom companies, Telenor Pakistan and Deodar Pakistan (a subsidiary of Jazz), have agreed to pay Rs26 billion in outstanding taxes to the Federal Board of Revenue (FBR).

The decision comes after both companies failed to secure relief from the IHC regarding withholding taxes related to the import of telecom equipment. Telenor Pakistan was ordered to pay Rs6 billion, while Deodar Pakistan faced a Rs20 billion liability.

Following the court rulings, the FBR, through its Large Taxpayer Office (LTO) in Islamabad, initiated aggressive recovery efforts. These included plans to freeze the companies’ bank accounts as part of its enforcement strategy. Operations extended into the weekend to expedite action.

However, the situation shifted on Saturday evening when the telecom operators opted for compliance over prolonged litigation. Telenor’s leadership confirmed its intent to pay the Rs6 billion due. Jazz also agreed to clear Deodar’s Rs20 billion tax obligations, effectively settling the dispute.

Both cases were originally tied to withholding tax on imported infrastructure critical to telecom operations. While the companies initially challenged the assessments in court, their recent losses left few options beyond settling.

In a rebuttal statement, the PMCL ( Jazz ) has shared in their statement that:

“It is clarified that neither PMCL nor its wholly owned subsidiary, Deodar, has received any adverse judgment in court, contrary to what was reported.

As one of the highest tax-paying businesses in the country, PMCL has consistently fulfilled its obligations in accordance with the law.

PMCL remains committed to compliance with applicable laws for all transactions, as and when required, always within the framework of the law and without compromising the rights and guarantees available under the Constitution of Pakistan. ”

Meanwhile, Deodar Pakistan, tasked with managing Jazz’s network infrastructure, is currently in the process of being sold to Engro Corporation in a high-profile $563 million deal. Although the Competition Commission of Pakistan has approved the acquisition, the transaction remains pending due to unresolved legal matters.

The FBR’s firm stance, combined with legal setbacks for the telecoms, ultimately led to the swift resolution. Sources within the revenue authority confirmed that neither company will pursue further appeals.