Thursday, June 17, 2010

Govt loses Rs30 billion in taxes - ugh, what thieves!

ISLAMABAD, June 14: The government is facing an estimated annual revenue loss of over Rs 30 billion on account of ‘grey telephony’ under which international calls are re-routed through local — often illegal — exchanges to avoid local taxes, mainly because of policies designed apparently to favour a sitting powerful minister.

The Pakistan Telecommunication Authority (PTA) has been reducing approved settlement rates for international calls terminating in Pakistan with a stated objective of reducing incentive for grey traffic. But the authority increased these rates soon after the PPP-led government came into power in Feb 2008.

The PTA now admits that its policy of raising ASR was ‘misused’ by some operators, but says that “no estimates for the volume of grey traffic and the annual loss for it are available”.

One of the leading beneficiaries of the grey traffic is Rodcom Europe, now being renamed as Hollywell Solutions. Rehman Malik, the sitting interior minister, is the chairman of London-based Rodcom Europe — a specialised VOIP (voice-over internet protocol) company established in 2001 “offering a limited number of high quality routes to a limited number of high quality customers”, according to the company website.

It says its early destinations were mainly to Europe and “Pakistan soon joined them when VOIP licences were first issued in 2003.” Rodcom’s activities in Pakistan, the website claimed, “have grown to a level where we are now one of the top five senders of Pakistan calls in Europe

The lack of transparency on the part of the government makes it next to impossible to figure out whether or not Rodcom’s activities are legal. The government contends that not all VOIPs are illegal, but the PTA refuses to provide details about operators registered with them.

This, observers conclude, suggests that most of them are operating in violation of rules and without paying taxes.

Regardless of whether or not Rodcom is operating legally, Rehman Malik’s ownership of the company raises moral and ethical questions. “That a federal minister who oversees law enforcement agencies which are required to curb such illegal telephone calls, should own a company involved in this business is clearly a conflict of interest,” an observer said.

Read more here.

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