ISLAMABAD: The government is likely to announce a relief plan for the telecommunications sector in the 2021-2022 budget, including the status of the industry, reducing the withholding tax on the income of mobile phone users by 12 , 5% to 10%, and further reducing to 8% in 2022-23, the federal excise tax from 17% to 16%, abolishing the sales tax of Rs250 on SIM cards and reducing the tax on services on telecommunications companies from 8% to 3%.
This was exclusively confirmed by Federal Minister of Information Technology and Telecommunications Syed Aminul Haq in a conversation with Business Recorder here on Wednesday.
The minister said the government has agreed in principle to industrialize the telecommunications sector and gradually reduce various heavy taxes imposed on the telecommunications sector and mobile phone users.
However, a reminder was sent to the President of the Federal Revenue Council (FBR) to include these measures in the budget proposals.
In addition, he indicated that a meeting had been held with the Minister of Finance Shaukat Tarin on these issues, and he assured to integrate these incentives in the budget bill.
This will be a major achievement that will directly benefit not only cell phone users but also help spread the spirit of digital Pakistan to remote areas of the country, he added.
Haq, earlier in March 2021, announced that the government had approved the introduction of a simple and easy tax system and the exemption of the telecommunications sector from all withholding taxes and complex collections.
The cabinet approved a four percent cut in tariffs and nine percent in regulatory tariffs on the import of telecommunications equipment.
In addition, instructions have been given to the FBR to reduce taxes from 20% and 7% to 5% and 3%, respectively, on raw materials for the fiber optic cable manufacturing industry, he said. added.
Telenor Pakistan CEO Irfan Khan also expressed optimism that the government would reduce tax burdens on consumers and operators and increase spectrum availability.
In an online chat with Julian Gorman, Head of APAC, at the GSMA Industry Association,
Khan said Pakistan was slow to identify specter as a lifeline for the Digital Pakistan government’s initiative, but acknowledged that an upcoming auction is a step in the right direction.
Telenor doesn’t expect much in terms of spectrum availability, but “at least that will ease some of the challenges” faced by operators, Khan said.
Khan noted that the government recognizes Pakistan as one of the highest taxed countries for telecommunications services, adding that Telenor has been assured it will receive incentives in the budget bill.
Copyright Business Recorder, 2021