DOF asked to probe pre-paid phone cards • Unlscrupulous businessmen rake in profits without paying taxes to the gov’t., says Rep. Apatang

Posted on May 26 1999

Lawmakers have asked the Department of Finance to clamp down on unlicensed businesses selling pre-paid phone cards and operating remittance service in the Commonwealth which proliferation have resulted in huge losses in revenues for the cash-strapped government.

Rep. David M. Apatang, chair of the House committee on Public Utilities, Transportation and Communications, has instructed the DOF to investigate the proliferation of these companies for possible violations of existing tax laws.

He has met with officials of the Revenue and Taxation Division as well executives of major telecommunication firms in the island to discuss the problems which have grown in recent months due to absence of laws to regulate the two business fields.

“I ask (finance officials) to look into the situation and give me a feedback as to what actions we can take,” Apatang said yesterday, adding the department will deploy agents in the three islands to check these businesses.

The three major telecommunications companies here — IT&E, MTC and MPCI — have complained against the rampant selling of several pre-paid phone cards which eat into their market.

Apatang said this is unfair for legitimate businesses that pay taxes to the government to compete with shadow companies which just come in and sell pre-paid phone cards without getting CNMI license.

Likewise, foreign remittance service operated by unlicensed companies offer unfair competition to others, while also putting at risk the money sent by nonresident workers

The committee is eyeing two such firms currently providing service to send money to China, according to Apatang. “We’re looking at those remittance services which are operating illegally without business license and not paying taxes to the CNMI.”

Pre-paid cards currently available in the market carry toll-free numbers which one must dial first before you get connected and are priced much lower than prevailing rates of the two existing phone companies.

Apatang claimed firms or individuals selling these cards get away without paying taxes to the CNMI government since they are not licensed.

The House panel is expected to recommend some steps for the Legislature to consider once its investigation is completed, which may include stringent regulations on the sale of pre-paid phone cards in the Northern Marianas.

Popular among the thousands of nonresident workers in the island, these cards can be bought in stores for less than $10 and be used for as much as 40 minutes for calls in the Philippines, or nearly two hours for mainland or Guam connection.

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