The telecom sector is lobbying with the government to reduce the withholding tax and sales tax rates in the budget slated to be announced by the end of this month. Currently, the withholding tax rate stands at 14pc which remains a major source of revenue generation for the Federal Board of Revenue (FBR).
In a meeting with journalists on Thursday, Telenor’s Chief Corporate Affairs and Strategy Officer Muhammad Aslam Hayat said elaborate proposals have been submitted to the FBR for reduction in rates of withholding tax and sales tax. Mr Hayat demanded that the withholding tax rate should be decreased to 10pc.
The telecom sector has suggested rationalizing the rate of GST/FED and brings it at par with other sectors. According to Hayat, the withholding tax regime for the telecom sector remains very high in comparison to other sectors, and the tax rate for mobile telephony and internet services is in the higher tier in comparison to its fixed line competitors.
The telecom industry feels that setting the rate of GST/FED to 17pc can help in creation of 4,200 jobs by 2021, increase the GDP by $1.2b and add 1.8 million connections. Also the removal of SIM sales tax and finishing annual licence fees can furnish an increase in GDP by $800m, create additional 4,500 jobs and add another 1.2 million connections. A suggestion was also made to remove GST/FED on data services, and introducing uniformity of tax rates across all provinces. Also a reduction in sales tax and custom duties has also been sought on import of mobile phones, which forms 37pc of device value. The abolishment of IMEI tax ranging from Rs 300 -1,500 and SIM Issuance and Supply Tax of Rs 250 has also been put forward.
