ISLAMABAD: Minister of state for IT & Telecom Mrs Anusha Rehman has urged provincial governments to reduce sales tax on internet services so the Information Technology sector should tax maximum benefits of already announced reduction in duty and taxes by the federal government in the Budget 2017/2018.
She said that the provinces should now take positive measures and should reduce sales tax on Internet Services, as services are a provincial subject.
In the federal budget 2017/2018, Federal Excise Duty on Telecommunication Services has been reduced from 18.5 percent to 17 percent. Sales tax on smart phones is reduced from Rs1000 to Rs650 per set. Customs Duty on telecom equipment reduced from up to 16 percent to 9 percent. Withholding income tax for mobile phone subscribers reduced from 14 percent to 12.5 percent.
She said that the government was bridging the “Digital Divide” through connecting the unconnected because widespread affordable, reliable and quality mobile broadband access not only bridges the “digital divide” but also provide opportunities to the marginalized segment of the population particularly of rural areas to uplift their socioeconomic conditions.
She further said that due to policy measures, Pakistan had witnessed three consecutive 3G/4G successful auctions, therefore smart phone based mobile broadband connections have grown ten-fold since 2013 to over forty million.
In 2013, without 3G, Pakistan was lagging behind Afghanistan; but today with 3G/4G, it has leapt ahead of Turkey, and efforts are being made to make Pakistan one of the first deployments of 5G in the world, around 2020.
It’s our resolve that Access should not be limited to the relatively affluent or to urban centers; we have to connect and empower our rural population as well. Therefore MOIT through (USF), will ensure that every village of over a hundred population across the country is going to have connectivity by 2018, Minister added.
The minister further said that new budgetary concessions will not only reduce the cost of access but also will make it more affordable, which is particularly important for poorer segments of the population.
Appreciating the need to sustain this trajectory, the government exempted IT exporters from sales tax in the Islamabad Capital Territory, and proposed that Provincial Sales Tax regimes will follow the suit.
The extension on exemption from income tax has been extended till 2019. IT export firms as well as freelancers, have been allowed to maintain foreign exchange accounts, which will also increase the country’s foreign exchange earnings and deposits.
Though Pakistan ranks at number four among top freelancing suppliers, the overall level of IT Exports remains much lower than similar countries.
Government is focusing and incentivizing “startups” registered with PSEB, the first incentive being provided to startups in the budget is a three-year exemption on income tax of all types.
To increase the growth trajectory, MOIT is working with industry to assess additional incentives for startups, angel and venture capital investors, and incubators, as provided by both developed and emerging economies around the world. Since the last four years, the surge in broadband connectivity has enabled a surge in startups.
