IHC Reserves Judgment on Telenor’s Petition Against WHT on Spectrum Fee

Islamabad High Court today reserved its decision on Telenor’s petition against 10 percent withholding tax on spectrum fee.

Court was today explained by counsels of Telenor Pakistan, FBR and Pakistan Telecommunication Authority.

Telenor Pakistan was contending that deduction of withholding tax at 10 percent of the gross sale price of spectrum auction is unlawful, baseless and based on a gross misinterpretation of the said provision without jurisdiction.

More details on Telenor’s petition can be viewed here.

It must be recalled that PTA is not issuing license to Telenor for 850MHz spectrum — that Telenor was declared as winner earlier this month — despite paying half price of spectrum fee in advance and while remaining fee will be paid in five equal annual installments along with cumulative mark-up @ LIBOR + 3% from effective date of license to date of payment.

PTA is contesting that Telenor Pakistan must pay 10% WHT — i.e. $39.5 million — to obtain the license.

It must be noted that all operators had paid 10% withholding tax at the time of previous auction. Similarly Information Memorandum for recent auction had clear mention of 10% withholding tax as well.

Despite all this, Telenor, exercised its right of moving court on a matter that it thought was illegal imposition of tax.

Islamabad High Court, while reserving the judgment, concluded the hearing and said that it will issue a decision during next hearing.