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ISLAMABAD: The government is likely to announce a relief package for telecom sector in the budget 2021-22 including the status of industry, reducing advance income tax on mobile phone users from 12.5 percent to 10 percent, and further reducing to eight percent in 2022-23, the federal excise duty from 17 percent to 16 percent, abolishing sales tax of Rs250 on SIM cards, and reducing services tax on telecommunication companies from eight percent to three percent.

This was exclusively confirmed by Federal Minister for Information Technology and Telecommunication Syed Aminul Haq, while talking to Business Recorder, here on Wednesday.

The minister said that the government in principle had agreed on the industrialisation of the telecom sector and the gradual reduction of various heavy taxes imposed on the telecom sector and mobile phone users.

However, a reminder was sent to the chairman Federal Board of Revenue (FBR) for including these measures in the budget proposals.

Further, he said that a meeting was held with Finance Minister Shaukat Tarin on these matters, and he assured to incorporate these incentives in the finance bill.

This will be 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, he added.

Haq, earlier in March 2021, announced 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 four percent customs duty and nine percent regulatory duty on import of telecommunication equipment.

Further, instructions have been issued to the FBR to reduce taxes from 20 percent and seven percent to five percent and three percent, respectively, on raw materials of optical fiber cable manufacturing industry, he added.

Telenor Pakistan CEO Irfan Khan has also expressed optimism that the government would lower tax burdens on consumers and operators, and increase spectrum availability.

In an online discussion with Julian Gorman, head of APAC, at industry association, GSMA,

Khan said Pakistan lags in identifying spectrum as a lifeline for the government’s Digital Pakistan initiative, but acknowledged an upcoming auction is a step in the right direction.

Telenor does not expect a lot in terms of spectrum availability, but “at least it will ease some of the challenges” facing operators, Khan said.

Khan noted the government recognised Pakistan is one of the most heavily-taxed nations for telecoms services, adding, Telenor was assured it would be handed some incentives in the finance bill.

Copyright Business Recorder, 2021

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