Jazz, Pakistan’s largest telecom operator, has settled a prolonged tax dispute with the Federal Board of Revenue (FBR) by agreeing to pay $158 million. The resolution, facilitated through the Alternate Dispute Resolution Committee (ADRC) on June 27, 2025, concludes a legal conflict that began in 2018 following Jazz’s internal restructuring.
The core of the dispute was Jazz’s transfer of its telecom tower infrastructure—valued at Rs98.5 billion ($940 million)—to a wholly owned subsidiary. The company had recorded an accounting gain of Rs75.9 billion from the transaction and argued it was exempt from taxation under Section 97(1) of the Income Tax Ordinance 2001, which covers intra-group transfers.
However, the Islamabad High Court (IHC), in a ruling on June 13, 2025, sided with the FBR. Justice Babar Sattar, leading the division bench, held that the transaction was taxable and that Jazz did not meet the criteria for tax deferral under Section 97. As a result, Jazz was liable for Rs22 billion ($78 million) in taxes.
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In response, Jazz approached the ADRC and negotiated a comprehensive settlement of $158 million to address all pending federal tax issues. The court further clarified that accounting profits can influence tax obligations, setting a critical legal precedent for future corporate tax assessments, especially for intra-group transactions involving major assets.
The conclusion of this high-profile case enables Jazz to move forward and concentrate on strengthening its digital services and accelerating the rollout of its 5G infrastructure in Pakistan.
