Telecom taxes

Pakistani telecom companies have collectively approached the Finance Ministry for the rationalization of duties and telecom taxes placed on the sector in both the imports and domestic stages in the upcoming federal budget for 2018-19.

The federal government plans to present the budget for the fiscal year 2018-19 on April 27 for approval from the National Assembly and the Pakistani telcos have jointly submitted the budget proposals to the ministry for consideration.

Suggestions Presented by Pakistani Telcos

For the coming budget, telcos have proposed the following revisions in the duties and telecom taxes:

Reduction/Exemption of Withholding Tax

The telecom sector has time and time again reminded the government that most of the telecom users in the country do not fall into the taxable brackets but they are still being subjected to withholding tax.

According to the telcos, around 70% of the population lives below the poverty line and the number of return filers is also very few so it is illogical to tax the people who do not fall into the taxable bracket or do not claim the withholding tax in their annual returns.

The telcos suggest that the withholding tax should either be abolished or should be reduced from 12.5% to 8% or below which will also promote the affordability of internet/data services to the low-income group people.

Decrease in Customs Duties & Sales tax Exemptions

The telecom companies also proposed the federal government to provide concessions to the companies in the shape of decreased rates of customs duties and exemption of sales tax on the import of telecom equipment.

The companies relayed that this move will enable them to increase the teledensity across the country and reach the far-flung areas who still cannot avail the full benefits of 3G/4G technology.

Decrease in FED and GST

Federal excise duty (FED) and general sales tax (GST) imposed on the telecom sector is much higher than other industries present in Pakistan. The companies will have to pay the 19.5% FED and 17% GST which stands around 15-16% in other sectors.

Thus, Pakistani telcos have proposed a decrease in both FED and GST to help the people avail maximum benefits from their telecom connections.

Last month, the Senate Standing Committee for Information Technology and Telecommunication also raised concerns over high levels of telecom taxes on consumers especially over the matter of taxing individuals who do not fall into the taxable bracket.

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