Jazz Settles Rs 45 Billion Tax Dispute with FBR After Court Ruling

After years of back-and-forth, Jazz has closed the chapter on one of the most talked-about tax disputes in Pakistan’s telecom industry. The company agreed to pay $158 million (around Rs 45 billion) to the Federal Board of Revenue (FBR), bringing the matter to a close through the Alternate Dispute Resolution Committee (ADRC) on June 27, 2025.

This all started when Jazz restructured some of its assets back in 2018. The transaction, though internal, caught the attention of tax authorities – and things took a serious legal turn.

Inside Jazz’s 2018 Intra-Group Asset Transfer

In 2018, Jazz moved its tower infrastructure, worth Rs 98.5 billion ($940 million), to a company it fully owns. On paper, this created an accounting gain of Rs 75.9 billion. Jazz thought this move would be tax-exempt under Section 97(1) of the Income Tax Ordinance, which usually applies to intra-group transfers.

But the FBR didn’t agree. They believed this transaction actually generated real economic gain and wasn’t just a formality. That meant taxes were due – and hefty ones at that.

Islamabad High Court Confirms FBR’s Right to Tax Corporate Restructuring

On June 13, 2025, the Islamabad High Court (IHC) made its stance clear. The bench, led by Justice Babar Sattar, said Jazz’s transfer didn’t meet Section 97 requirements. Since the asset was transferred at fair market value and resulted in profit, it couldn’t be considered tax-exempt.

The court also supported the FBR’s right to assess tax based on accounting income – a significant win for the tax authorities. This ruling opened the door for taxing similar internal transactions if they actually create wealth.

What Jazz’s Tax Case Means for the Telecom Sector and Beyond

This isn’t just about Jazz. The verdict has set a strong precedent. Any company involved in corporate restructuring or intra-group transfers needs to tread carefully now. Just because it’s an internal move doesn’t automatically mean it’s tax-free.

Jazz choosing to go through the ADRC and settle the matter also shows that big corporations are now opting for quicker resolutions instead of dragging things through the courts.

Key Takeaways from the Jazz Tax Dispute

• Jazz paid $158 million to settle a long-running tax case
• The issue was tied to a 2018 internal asset transfer worth Rs 98.5 billion
• Court ruled the transaction violated Section 97(1) and was taxable
• FBR’s power to assess intra-group restructuring gains was upheld
• Jazz faced a tax liability of Rs 22 billion due to accounting gains

What Other Companies Should Learn from This Tax Settlement

This decision sends a loud message to multinationals and local groups: internal deals that look profitable may be taxable. Whether it’s telecom, banking, or manufacturing, the rules are now clearer, and compliance is more critical than ever.

Tax authorities will likely scrutinize intra-group transactions more closely, especially those that involve big numbers and real gains.

Conclusion: Jazz Ends Long-Standing Tax Battle with a $158M Settlement

Jazz’s decision to settle this major tax case closes a controversial chapter in corporate taxation. With the Islamabad High Court backing the FBR and the ADRC process leading to resolution, it’s a reminder to companies that restructuring moves, even internal ones, must follow tax laws to the letter.

Stay tuned to MediaBites for more updates on corporate tax developments and telecom industry news.