Companies are always looking for tax breaks. After all, people build companies to bring in revenue, and taxes always cut into the bottom line. As firms come up with more creative ways to save money from federal tax collection agencies, the agencies are getting more creative about catching tax evaders. QMobile has become the latest in a long list of companies that have been caught red-handed.

QMobile: Importer or Manufacturer?

Communication enterprise QMobile is a China-based electronics wholesaler and retailer that specializes in smartphone production. A report released by the Federal Board of Revenue (FBR) this year shows that the consumer electronics company may have been involved in a scheme aimed at evading billions of rupees in taxes. According to the FBR, QMobile achieved this by falsely reporting their status as a manufacturer as opposed to an importer of electronics.

The fact that QMobile is a China-based phone manufacturer is not in dispute. The conflict in the finances arose when the company registered itself as a manufacturer in Pakistan, stated the FBR report, confirming that it assembles its phones within the country.

Because QMobile registered as a manufacturer, “Q-Mobile phones have been imported into the country as raw material”, the report further elaborated. Bringing in already assembled merchandise as raw materials saved the firm the billions of rupees in taxes that it would have paid for importing ready-made phones during the five-year period it acted as a ‘manufacturer’.

An FBR audit confirmed QMobile portraying its status of an importer as a manufacturer within Pakistan cost the national exchequer billions, though the state-owned body did not disclose exact figures.

What next?

The FBR has called for the indictment of the QMobile officials responsible for the “willful defrauding” of the tax collection body.

Meanwhile, the director of QMobile could not be reached for comment.

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