ISLAMABAD: The Senate Standing Committee for Information Technology and Telecommunication has recently recognised the contribution of the telecom sector and appreciated the investment and job creation opportunities provided by the sector in the country.
The committee also raised concerns over high levels of consumer taxation with special reference to giving relief to the masses who are below a certain annual income level, which is not taxable as per prevailing tax laws.
The committee expressed its concerns on high tax deduction on mobile recharge, particularly on deduction of advance income tax from the majority of subscribers who do not fall under the tax net and have no way of claiming the refund. The committee directed the Federal Board of Revenue (FBR) and cellular mobile operators to present recommendations for a more rationalised tax regime.
Mobile penetration and services uptake has already hit the glass ceiling and would not be able to break this barrier until substantial tax relief is introduced. The taxes inhibit growth, discourage investment and stall services uptake among the masses. The telecom sector suggested the abolishment of advance income tax for the majority of telecom subscribers, who do not fall under the tax net and yet have to pay withholding tax which they cannot claim back.
In addition, the sector recommended harmonisation of Federal Excise Duty (FED) and General Sales Tax (GST) across federation and all provinces and its rationalisation to 16 per cent in line with GST and FED rates applicable on other sectors of the economy. Moreover, the sector believes that data tax will not only hamper economic growth in the country but will also adversely impact government’s initiatives for the proliferation of mobile broadband in Pakistan. Telecom sector strongly recommended abolishment of GST on data services by the provinces.
The sector has time and again called for a rationalised reduction in taxes that will help ensure affordable services for the masses, which in turn will increase mobile penetration, bring further socioeconomic benefits to Pakistan and will go a long way towards the realisation of the government’s ambition of a digital Pakistan.
Pakistan’s cellular sector, since its deregulation, has been at the forefront of introducing innovative services for enabling and empowering people and has played a key role in social and economic advancement. It has made substantial contributions to the welfare of the society and is amongst the largest contributors to the country’s exchequer in terms of direct and indirect taxes. The sector has invested over $15 billion in the economy since deregulation in 2003 and has created over 14,000 jobs.
The sector is recognised as an enabler for society, bringing greater financial and digital inclusion as well as documentation of economy through mobile communication to 85 per cent of country’s population. It is directly aligned with the government’s vision of 2025, striving to develop an ecosystem for digitalisation, increasing internet penetration and bridging the digital divide. Access to the useful digital and financial services is a game changer for masses as they usher in a plethora of opportunities for them to improve their standard of living.