The Pakistan Telecommunication Authority (PTA) has recommended to the government to rationalise tax regime for information and communication technology (ICT) sector, and cut taxes on consumers of mobile phones and telecom operators to encourage new investments and usage of telecom services in the country.
The PTA has stated that the country's ICT sector is overburdened with taxes and recommended to the government to bring down taxes for consumers and telecom operators for increased investments, and usage of telecom services in the country. According to official documents, the PTA has stated that it is of the view that Pakistan's ICT sector is overburdened with taxes that need to be rationalised.
It will continue to engage with revenue authorities for tax rationalisation in the ICT and telecom sector to encourage further investment and job opportunities. The constituents of the fourth industrial revolution such as artificial intelligence, the internet of things, block chains, and big data hold the key to a prosperous digital future.
However, impediments such as non-availability of latest technology and networks can be removed only through increased investments from financial comfort of operators.
High taxes on operators as well as consumers are therefore required to be brought down for not only increased investments but also to increase the usage of telecom services in the country. "Our engagement with the revenue authorities for tax rationalisation in the ICT and telecom sector will continue, so that improved tax structures can encourage further investment and job opportunities," the authority added.
The Supreme Court of Pakistan suspended sales tax, withholding tax and service charges in June 2018 on the pre-paid reload/recharge and usage. The CMOs' implemented the order of the Supreme Court in letter and spirit, and stopped deducting taxes (GST/FED and WHT) and services charges from prepaid consumers.
Resultantly, pre-paid subscribers got 100 percent balance (i.e. Rs100 upon recharge of Rs100). However, the same taxes were restored by the apex court on 24 June, 2019, resultantly; the CMOs started levying taxes on their packages.
After restoration of taxes, it was observed that due to competition in the market, some CMOs reduced their mobile data tariff and did not pass on the impact of taxes to their consumers.
The CMOs also started incentivising their subscribers by offering more on-net minutes, SMS and data bundles. The PTA created awareness among consumers and issued press releases in the print media stating that "after restoration of taxes by the Supreme Court of Pakistan, the CMOs have not increased the rates; instead they have applied taxes on the existing tariff."
Furthermore, the general public was assured that the "PTA is vigilant about the rates/tariff being charged by the CMOs and action will be initiated on any reported incidence of charging above the published tariff and applicable taxes."