Telecom Operators Association Opposes Proposed Tax Measures in Fiscal Budget 2024-25

Islamabad, – The Telecom Operators Association has raised significant concerns over the proposed tax amendments outlined in the Finance Bill 2024-25, cautioning against potential detrimental impacts on Pakistan’s telecom industry and the broader vision of a Digital Pakistan.

In a letter addressed to the Senate Standing Committee on Finance, the association highlighted the crucial role of the telecommunications sector in national tax collection, contributing approximately PKR 340 billion annually. This includes consumer-related advance taxes, sales taxes, and contributions from suppliers and vendors. Moreover, the sector has attracted over US$ 15 billion in Foreign Direct Investment (FDI), underscoring its pivotal role in infrastructure development aligned with technological advancements.

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Key Concerns Raised by Telecom Operators Association:

1. Economic Dependence and Foreign Investment: Emphasizing the telecom sector’s integral role in Pakistan’s economic connectivity, the association expressed apprehension over the potential exit of major foreign investors amidst proposed tax reforms.
2. Impractical Tax Collection Measures: Criticizing the proposal to impose a 75% advance tax on telecom customers who are non-filers, the association deemed it impractical and warned of adverse repercussions, including revenue losses for both the industry and the government.
3. Penalties for ITGO Non-Compliance: Strongly opposing penalties ranging from PKR 100 million to PKR 200 million every fortnight for non-compliance with the Information Technology and Government Orders (ITGO), the association argued that telecom companies act as enablers rather than principal parties in disputes with tax authorities.
4. Impact on Digital Penetration: The proposal to increase sales tax rates on mobile phones valued up to US$ 500 was flagged as detrimental to digital penetration efforts, particularly among lower-income groups crucial to achieving the vision of Digital Pakistan.

Vital Role of Telecom in Essential Services:

The telecom sector serves as the backbone for critical services, including banking and financial transactions, e-commerce, national security institutions, and digital applications. Any additional tax burden, the association cautioned, could lead to unnecessary legal disputes and potentially drive away foreign investment critical for sectoral growth.

Call for Reconsideration:

Attached to their correspondence is a detailed analysis (Annexure-A) outlining the impracticality and adverse effects of the proposed tax measures. The association urged urgent reconsideration by the Senate Standing Committee on Finance to safeguard the telecom industry’s stability and support Pakistan’s ambitious digital agenda.

Conclusion:

As discussions on the Finance Bill 2024-25 continue, the Telecom Operators Association remains steadfast in its appeal to policymakers to revise the proposed tax amendments in alignment with industry realities and national development objectives.