Amin ul Haque, the Federal Minister of Information Technology and Telecommunications, indicated on Wednesday that he will reject increased telecom levies at a special cabinet meeting on Thursday.
In an interview with the media, the minister expressed his views and stated his opposition to the taxes. “In the mini-budget, we don’t want any tax on the IT business,” he stated. He went on to say that if the new tax is imposed, he will stand with the IT industry’s people and reject it.
In response to a question, the minister stated that the issue of withholding tax would be resolved the following day. Taxes on computers and tablets may also be raised, according to speculations. As Minister of Information Technology, I would reject these judgments, Haque stated.
“I will put my petitions before the Prime Minister. I hope these things will not be taxed,” said the minister, adding that their target is to build about 40 more software parks in the country.
The proposed increase in the withholding tax (WHT) on telecom services of 5% and the standard rate of 17 percent sales tax on imports of computers and accessories in the upcoming mini-budget will have a significant impact on the IT sector’s growth, as well as jeopardise the $5 billion target for ICT exports. The telecom sector’s development and investment potential would be harmed, according to Haque, if taxes were raised.
In the upcoming mini-budget 2021-22, the government is expected to boost WHT by 50%, increasing it from 10% to 15% on telecom subscribers. In the budget for 2021-22, the government reduced the WHT rate from 12.5 percent to 10 percent, with the promise that it will be further reduced to 8% in the next budget for 2022-23.
However, the government is considering reversing its revenue-raising move by raising the advance tax on the telecom sector by five percentage points. The cellular advance tax will be raised to a historic high of 15% if the draught proposal is passed.
WHT is currently levied at a rate of 10% on all telecommunications users, regardless of their taxable obligations. The bulk of the population earns money that is not taxable. These people are obligated to pay WHT, which they will never be able to repay.
The Ministry of Information Technology and Telecommunications has opposed any effort to impose a 17 percent GST on computer and accessory imports, claiming that it will stifle the IT sector’s growth.
“If the government moves ahead with the imposition of GST at the standard rate of 17 percent on import of computers, laptops, and its others accessories, it would negatively impact freelancing, IT exports and PM’s vision of Digital Pakistan,” official sources of the Ministry of Information Technology and Telecommunication (MoITT) said.
The regulation change would raise the cost of necessary tools, making laptops, computers, and peripherals more difficult to come by for freelancers and people. Amin-ul-Haque, the Minister for Information Technology, had earlier opened the Software Technology Park in Rawalpindi on Wednesday.
In his remarks at the opening ceremony, he stated that Software Technology Parks will be constructed in Gujrat, Gujranwala, Abbottabad, and Mansehra to encourage IT education and employment prospects for the youth.
The Minister emphasised the government’s IT-related activities in Gilgit-Baltistan, where young students have gained financial independence through entrepreneurship.
He believes that greater facilities for the kids are needed in IT parks across the country. He emphasised the importance of educating the kids about modern education and information technology developments.
To read our blog on experts express reservations about the proposed increase in telecommunications withholding tax (WHT), click here.
