ISLAMABAD: Apart from the local companies asking to remove the new duty on telephone calls, the international bodies have also asked Pakistan to remove additional Federal Excise Duty (FED) on cellular calls imposed in the fresh budget.
Julian Gorman, GSMA’s head of Asia Pacific, said that the additional FED will have a negative impact on demand and perspective of development for the mobile sector.
The GSMA or Global System for Mobile Communications, has written a letter to Finance Minister Shaukat Tarin urging him to consider the removal of Rs0.75 FED per voice call exceeding 5 minutes.
“This new levy creates uncertainty while the mobile sector is planning long-term investment as part of planned spectrum auction presenting a significant risk for the government achieving the Digital Pakistan Vision,” Gorman said.
He recalled that over the last years, the government of Pakistan and the mobile sector have engaged in a dialogue to reduce the mobile sector taxation in order to boost Pakistan’s transition to a digital economy.
“However, we wish to express our concerns regarding the introduction of a new levy in the Finance Bill 2021-22 (FY22),” Gorman said.
He added that the telecommunication sector was the key enabler for social and economic growth and these tax reforms will contribute to spread the benefits more widely within society.
“The late introduction of such levy would negate the aforementioned tax reforms by raising the cost of mobile services, in particular for low- income households,” the letter said, adding, “From an operational perspective, the new levy will significantly increase the compliance cost for the government and the mobile sector due to the challenge of implementing such tax.”
Gorman stressed that the new levy would create an additional barrier and slow the progress to close the usage gap.
Meanwhile, sources in the Ministry of IT and Telecom said that the decision has been made solely by tax collectors, without consulting the relevant stakeholders.
“A letter has been forwarded to the prime minister by the IT Ministry extending concerns that levying an additional duty will only damage the Digital Pakistan initiative,” sources said, “it is expected that the new levy would be withdrawn in the next amendment in the finance bill.”
