Telecom sector: Tax relief measures to be made part of Finance Bill, 2021

ISLAMABAD: All tax relief measures approved by the Economic Coordination Committee (ECC) of the Cabinet for the telecom sector would be made part of the next Finance Bill, 2021 and would be made applicable from July 1st, 2021.

Sources told Business Recorder, here on Friday that the approved tax relief measures including reduction in taxes for the telecom sector would not be implemented during the current fiscal year.

There are many qualifications to each of tax relief measures, which were approved by the ECC. The government would include these reductions in taxes and other relief for the telecom sector in the coming federal budget. Similarly, the abolition of the regulatory duty on import of various kinds of telecom equipment would also be enforced from the next fiscal year.

The following recommendations have been approved by the ECC of the Cabinet along with the qualifications required for each recommendation: First, the advance income tax (withholding tax) would be reduced from 12.5 to 10 percent from July 1, 2021 and it would be further brought down up to eight percent in July 2022. The phased-wise reduction of the said tax will continue.

Second, the Federal Excise Duty (FED) reduced from 17 percent to 16 percent in the federal capital. Harmonisation in provinces to be included in the harmonisation framework currently being concluded. Third, the government would accept the Lahore High Court (LHC)'s judgment in favour of two cellular companies, implement it for all the mobile operators, and withdraw Rs250 issuance tax on the sale of new SIM cards.

Fourth, the telecom sector (All PTA Licensees) should be included in Division II of PART III of Income Tax Ordinance 2001 to grant relief of three percent minimum tax instead of eight percent. Fifth, Pakistan Telecom Companies are dependent to import various equipment under HS Code 8517 and HS Code 8544.

It was proposed that the Regulatory Duty on this equipment should be abolished. The ECC approved that this will be actuated through a decision of the National Tariff Commission.

Copyright Business Recorder, 2021