STAFF REPORT ISB: The SDPIs Study Group on Information Technology and Telecommunication has said that Rs. 40 billion annual withholding tax on telecom consumers has caused the diversion of Foreign Direct Investment to other regional countries. Speaking on the occasion, Vice-President of Telenor Aslam Hayat said that withholding tax is imposed on those consumers, who either do not fall in the tax bracket or do not file tax returns and ultimately cannot get refunds. He revealed that during the last 10 years, the telecom sector has given $8 billion revenue to the government in the form of direct and indirect taxes, the sector is treated differently when it comes to tax collection regime.

Hayat also highlighted that the government can rely on the growth of this sector, instead of going to the IMF for investment.

Earlier, Deputy Executive Director SDPI Dr Vaqar Ahmed said the growth in the telecom sector has stalled due to no significant Foreign Direct Investment in this sector during the recent past.

According to the SDPIs research, foreign investors are now more interested in other regional economies in South Asia due to rationalized tax burden, lower cost of doing business and investor-friendly regulatory regimes there.

Dr M. Saleem, Director-General Commercial Affairs, PTA, said that he cellular sector in Pakistan falls among the most heavily taxed cellular sectors in the world, which is an impediment to its growth.

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