Daily Times

KARACHI: The Pakistan Muslim League Nawaz (PML-N) led government pocketed Rs 262 billion from telecom consumers in general sales tax (GST) and activation taxes during the past five years.

The statistics show that the overall spending from 2012 to 2016 in telecom and cellular mobile services by telecom consumers in Pakistan reached a whopping Rs 2266.7 billion.

On the whole, telecom industry including cellular mobile operators (CMOs) contributed estimated Rs 808.16 billion to the national exchequer in terms of taxes, regulatory fees, initial and annual license fees, activation tax, and other charges during the last five-year period (2012-16).

According to the Pakistan Telecommunication Authority (PTA)’s latest data, government of Pakistan collected Rs 632.12 billion only in terms of GST and withholding tax (WHT) in the said period.

The PTA in its annual report for 2016-17 admitted that the WHT @12.5 percent on every mobile recharge and tax rates by provincial revenue authorities were still quite high and should be reduced. The PTA said harmonisation of federal and provincial tax laws was important to resolve sales tax collection issues and avoid undue litigation between operators and the federation.

The PTA further said that telecom sector should be granted the industrial undertaking status so that the mobile operators are able to adjust the income tax paid at the time of import of telecom equipment, which is treated as a final tax liability. High custom duty and other taxes on the import of mobile handsets and telecom equipment also impede the mobile penetration, it added. At present, telecom consumers are charged 19.5 percent in form of GST and 12.5 percent in form of WHT; while 16 percent GST and 10 percent WHT are charged in other sectors. Telecom sector is one of the highest tax paying sectors of Pakistan, as on every mobile recharge, consumers have to pay 14 percent of their charged amount in taxes.

Telecom companies kept demanding the government to rationalise the telecom tax structure presenting five proposals to the government which include: eliminate WHT, rationalise federal excise duty (FED)/ GST, grant of industrial status to telecom sector by Federal Board of Revenue (FBR), eliminate advance income tax on auction price of 4G spectrum and eliminate SIM issuance and IMEI taxes.

According to the breakup, telecom consumers paid a total Rs 262.03 billion in GST during past five years as government collected Rs 65.69 billion GST in 2012, Rs 60.12 billion in 2013, Rs 45.77 billion in 2014, Rs 44.25 billion in 2015 and Rs 46.20 billion in 2016.

Published in Daily Times, December 8^th 2017.