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Telecom sector generates Rs745b in five years

byCT Report
27/04/2016
in Business
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ISLAMABAD: The country’s telecom sector generated Rs745 billion revenues in terms of regulatory duties and taxes during the last five years.

According to the annual report of the Pakistan Telecommunication Authority (PTA), a higher contribution of Rs243.8 billion was made during 2013-14 due to Pakistan Telecommunication Authority’s (PTA) extraordinary deposits of Rs96.5 billion of the total value of 3G and 4G spectrum auctions in April 2014.

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In 2014-15, the telecom sector contributed Rs126.6 billion to the national exchequer in terms of regulatory duties and taxes.

The sector is a significant source of revenue generation for the government in terms of initial and annual licence fees, initial and annual spectrum fees, Universal Service Fund (USF) and Research and Development (R&D) Fund contributions, Access Promotion Contribution(APC) for USF Numbering Charges licence, application fee, etc, and taxes, including general sales tax (GST) federal excise duty (FED), SIM activation tax, advance withholding tax (WHT), sales tax on mobile handsets, Customs duties and other taxes.

The PTA’s annual report said overall telecom sector taxes and levies in Pakistan are considered higher as compared to the taxes on telecom services in other regional countries.

Further GST (19.5 percent in Punjab and Khyber-Pakhtunkhwa, 18 percent in Sindh and 18.5 percent in the rest of Pakistan) and WHT (14 percent) on telecom services are much higher as compared to the average 16 percent GST and 10 percent WHT in other sectors.

The PTA and telecom industry believe that rationalisation of taxes on the telecom sector will enhance sector’s growth, which may lead to better collections for the government levies in the long run.

In this regard, the telecom industry has submitted tax proposals to the government for consideration.

According to the proposals, the government is currently charging WHT at the rate of 14 percent from the telecom consumers, which is unjustified because most of the consumers are poor and below the minimum threshold requirement of Rs400,000 for filing the tax return and; hence, nontax filers. They are unable to claim advance income tax at the end of the fiscal year.

Therefore, WHT tax deduction system on the telecom services needs to be reviewed by the Federal Bureau of Revenue (FBR) and should be rationalised in order to save the poor people from undue taxation.

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