Reduction in tax regime for ICT sector

The Pakistan Telecommunication Authority (PTA) has suggested to the government for reduction in tax regime for information and communication technology (ICT) sector.

Reduction in tax regime for ICT sector

The PTA has stated that the ICT sector in Pakistan is overburdened with taxes and suggested the government to reduce taxes for consumers and telecom operators for increased investments, and usage of telecom services in the country.

PTA further stated that it will continue to engage with revenue authorities for tax rationalization in the ICT and telecom sector to encourage more 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, barriers such as non-availability of latest technology and networks can be removed only through increased investments from financial comfort of operators.

PTA added that 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 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.

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 gives incentives to 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.”