After receiving criticism following the publication of the mini-budget, the government is reconsidering its decision to raise taxes on the telcos.
Aminul Haq, the Minister of Information Technology and Telecommunications, opposes the proposed taxes in the mini-budget.
Shaukat Tarin, the Minister of Finance, informed Dawn that a meeting between the stakeholders has been set, with the Minister of IT in attendance, to address their concerns. He stated that the telecom industry is “near and dear to his heart” and that he will investigate its issues.
Prior to this, telecom businesses wrote to the Finance and IT Ministers, arguing that the proposed rise in the telecom sector tax would reduce the telecom industry’s contribution to GDP growth.
They expressed concern about the government’s decision in the mini-budget to raise the withholding tax (WHT) from 10% to 15% and the GST from 17% to 17%.
The industry’s worries about the government’s decision were expressed in their letter. It stated that 30% of the population lives in poverty, which makes increasing WHT on all subscribers unjust.
Telecom companies said the government had approved a reduction in WHT from 12.5 percent to 10 percent this year through the Federal Budget that was approved in June 2021, as well as another reduction from 10 percent to 8 percent in the following financial year, following more than a year of detailed deliberations with the industry.
The government’s reversal, which came just six months after the decision, will have an impact on policies and investor confidence.
In the letter, the telecom companies also expressed their opposition to the increase of GST to 17 percent for cellular mobile handsets, tablets, and PCs, claiming that an increase in their pricing would damage mass affordability and digitalization.
Furthermore, the CEOs of the enterprises are sure that the concerned ministers will block the tax increases.
Aamir Hafeez Ibrahim, the CEO of Jazz, tweeted on Tuesday that he was disappointed that Pakistan was considering imposing a 15% tax on internet services while other countries are subsidizing them.
To read our blog on In the Mini-Budget, the government will form a committee to address tax issues of telecom sector, click here.
