STAFF REPORT ISB: Censuring the exorbitant tax burden on telecom sector, the SDPI Study Group on ICT has concluded that Rs40 billion annual withholding tax on telecom consumers have brought the once lucrative sector on the verge of decline leading to drastic reduction in Foreign Direct Investment.
Speaking on the occasion, Vice-President of Telenor Aslam Hayat said that withholding 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.
During the last 10 years, the telecom sector has given $8 billion revenue to the government in the form of direct and indirect taxes, he said, adding that the sector is treated differently when it comes to tax collection regime.
Hayat said instead of going to the IMF and asking for a tranche of $500 million, the government could have relied on the growth of this sector. He said an average user spends Rs2,250 annually for his/her cellular services out of which Rs992 go to the government in lieu of taxes, which has put a bar on the growth of broadband services.
Hayat said the government has yet to fulfil its promises including provision of industrial status to the telecom sector, and reduction in withholding tax from 15 per cent to 10 per cent.
Earlier, Deputy Executive Director of 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.