Telecom Industry: Budget 2024-25 Taxes Threaten 'Digital Pakistan' Vision

Islamabad: Operators Association wrote a letter to the Senate to highlight the substantial contributions of the telecommunications industry.

Which has emerged as a highly effective agent for national tax collection, and showing concern about unwarranted tax in budget 2024-25 on the telecom industry.

As per the letter, “Over the past year alone, it has played a pivotal role in collecting taxes totaling Rs340 billion, encompassing consumer-related advance taxes, sales taxes, and taxes from suppliers and vendors. Foreign Direct Investment (FDI) has exceeded US$ 15 billion to date, underscoring our commitment to ongoing infrastructure development in line with technological advancements.”

The purpose of reaching out to you in urgency is to oppose the proposed suggestion in Finance Bill 2023-24 about the telecom industry and would like to caution the government of Punjab that these suggestions will kill the already challenged industry and badly hamper the dream of Digital Pakistan.

“This is about the proposals for the IT and Telecom sector in the Finance Bill 2024-25. We have the following concerns that are of urgent importance and require immediate consideration:

“Pakistan’s economy is dependent on the Telecom sector for connectivity. Please note that the Telecom sector is already struggling with two major foreign investors in cellular and one in fixed also leaving Pakistan.

“Tax measures like 75% advance tax collection for non-filers from the telecom customers are technically impractical and non-workable leading to revenue losses for the sector and Government.

“Penalizing the Telecom sector for non-compliance with the ITGO by Authorities needs reconsideration as CMOs are enablers of the ITGO and not the principal parties in dispute with the tax authorities. Penalties for non-compliance ranging from 100 million PKR to 200 million PKR every fortnight,” the letter reads.

Sales tax on mobile phones to destroy digital penetration in lower income groups

"Increasing rate of sales tax on mobile phone sets of value up to US$ 500 will destroy
digital penetration in lower income groups and severely compromise any dream of a Digital
Pakistan," the letter stated.

The Telecom industry demanded that all essential services including the Banking sector, ATMs, Credit Cards, E-commerce, Passport Control, Security Institutions, National Data Base, E-commerce, Digital applications, etc., be connected and governed through the Internet bandwidth and services provided by Telcos.