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Telecom sector gets status of industry thru relief package

• Govt decides to increase IT exports to $5bn by 2023 ISLAMABAD: The government Thursday announced a...
Published March 12, 2021

ISLAMABAD: The government Thursday announced a relief package for telecom sector. The package includes the status of industry for this sector, cut in advance income tax on mobile phone users from 12.5 percent to 10 percent, which will be further reduced to 8 percent in 2022-23, federal excise duty will be brought down from 17 percent to 16 percent, Rs250 on SIM card has been abolished and services tax on telecommunication companies reduced from 8 percent to 3 percent. However, all these incentives would be applicable from July 1, 2021, said Federal Minister for Information Technology and Telecommunication, Syed Aminul Haque while addressing a press conference here.

When Business Recorder asked the minister about the impact of reduction in tax rates on the national exchequer, he said: “We are yet to calculate the impact”.

He said the federal cabinet has unanimously approved the industrialization of the telecom sector and the gradual reduction of various heavy taxes imposed on this sector and mobile phone users. This is a major achievement that will directly benefit not only mobile phone users but will also help spread the spirit of “digital Pakistan” to remote areas of the country as well, he added.

He further stated that the government has approved the introduction of a simple and easy tax system and exemption of the telecom sector from all withholding taxes and complex collections.

The cabinet has approved reduction of 4 percent customs duty and 9 percent regulatory duty on import of telecommunication equipment. Further instructions have been issued to the Federal Board of Revenue (FBR) to reduce taxes from 20 percent and 7 percent to 5 percent and 3 percent, respectively, on raw materials of optical fiber cable manufacturing industry.

Haque said that after the preparation of the Right of Way Policy, the credit for the revolutionary initiative of getting its approval from all forums also goes to the Ministry of IT and Telecommunication. The policy sets out a fee structure for working in the required areas.

Telecom facilities will be considered as ‘critical infrastructure’ and no obstruction or unnecessary problems will be allowed in this regard. Other important issues, including ‘Common Services Corridor’, security of telecom infrastructure, safety measures on health principles, have been included in the Right of Way policy, which will be binding on all concerned agencies and administrations, and it is a kind of a one-window operation.

The federal minister said that the Universal Service Fund has initiated 32 different projects worth Rs22 billion during the 31 months of the present government. Further in 10,132 villages in 50 districts of backward areas, broadband services are being provided to about 4 million people.

He further said that Pakistan Software Export Board (PSEB) has received 40 percent additional export remittances in the first six months of the current financial year till December 31, 2020. Under the Pakistan Software Export Board, dozens of projects titled "Tech Destination Pakistan" have been launched to promote the IT industry. The aim is to provide facilities and training opportunities to IT professionals and IT companies as well as to attract local and foreign investors. He said that government has set a target of USD5 billion for IT exports by 2023.

He said that work has been started expeditiously for laying a network of software technology parks across the country under which 40 software technology parks to be set up in Swat, Bannu, Quetta, Faisalabad, Karachi and Sukkur under public-private partnership. These parks in Gilgit and Hyderabad are making millions of dollars in business within a few months of their establishment.

The foundation stone for the establishment of IT Parks in Karachi and Islamabad at a total cost of Rs44 billion will be laid soon.

The minister said that the National IT Board, a subsidiary of the Ministry of IT, had provided all the technical facilities and support for the structure of the National Command and Operations Center (NCOC) during the outbreak of Code-19.

NITB Digital Pakistan has developed 35 useful mobile applications and web portals for providing public services at the fingertips under Vision, including Pak Naghaban, Code Information Platform, Resource Management System for NDM and Real Time Dashboard for NCOC ETC. He said that under Ignite, incubation centers have been set up in 5 major cities of the country where 691 start-ups have registered themselves. Plans to set up incubation centers in Faisalabad, Hyderabad, Kamra, Mardan and other cities are in the final stages.

Haque said that SCO received 40 percent increase in revenue from Gilgit-Baltistan and Azad Kashmir for its services in 2018-19 compared to the year before i.e. Rs. 3.50 billion was achieved while during 2019-20, 60 percent increase in revenue was achieved i.e. Rs 5.50 billion.

Further GSM network in Gilgit-Baltistan was expanded to 75 percent during the last two years under SCO for which 350 mobile towers were installed to transfer from 2G network to 4G networks while 200 more towers are being installed this year.

Replying to a question the minister said that there are reports that FBR is going to start crackdown on freelancers. The ministry will write to the FBR and the FIA in this regard and would be asked allowing them to work.

Copyright Business Recorder, 2021

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