ISLAMABAD: Aamir Ibrahim, CEO of Jazz and Chairman of the Telecom Operators Association of Pakistan, has made an urgent plea to the government to ease the substantial tax burden on the telecom sector in the upcoming fiscal year 2025–26 budget. He underscored that digital connectivity has transcended its status as a luxury, evolving into a vital public utility akin to essential services like electricity, water, and roads.
Speaking on behalf of the Telecom Operators Association, Ibrahim highlighted how the existing tax regime, characterized by a complex web of indirect and advance taxes, is significantly hampering telecom growth, discouraging much-needed investment, and slowing down innovation across the sector. Jazz, as the country’s largest telecom operator, is at the forefront of advocating for these challenges to be addressed by the government.
“The telecom industry is being unfairly burdened under a tax-heavy structure,” stated Ibrahim. “Our comprehensive proposals aim to cultivate a fair and forward-looking fiscal environment that empowers the telecom sector to contribute even more effectively to Pakistan’s digital future and overall economic prosperity.”
Key tax relief proposals submitted
The Telecom Operators Association, with strong backing from Jazz, has submitted detailed proposals to the Ministry of Finance. Key recommendations for the upcoming budget include:
Exemption from Withholding Tax: Seeking an amendment to the Second Schedule of the Income Tax Ordinance, 2001, to exempt telecom operators from certain withholding tax deductions.
Adjustable Withholding Tax (Section 153): Proposing to make the 4% withholding tax under Section 153 adjustable against final tax liability, rather than a minimum tax.
Abolition of Advance Income Tax: Calling for the abolition of the 10% advance income tax levied on spectrum fees.
Restoration of Minimum Tax Credits: Urging the restoration of the five-year period for carrying forward minimum tax credits under Section 113.
Reversal of Recent Changes: Demanding a reversal of recent amendments that allow tax authorities to reject advance tax estimates.
Elimination of Upfront Tax Deposit: Seeking to eliminate the 30% upfront tax deposit required for legal stays under Section 133(10).
Furthermore, the industry is advocating for the alignment of customs valuations for telecom equipment with international standards and a reduction in duties on raw materials essential for optical fiber cable manufacturing.
Telecom’s role in digital economy & informal sector
Ibrahim stressed that the telecom sector is not merely a revenue source but is vital to achieving critical national goals such as financial inclusion, expansion of e-commerce, advancements in telemedicine, and accessible digital education.
He pointed out a concerning statistic: nearly 35% of every mobile recharge is lost to taxes and duties, which disproportionately affects low-income users and acts as a significant barrier to broader digital adoption across the country.
Jazz also emphasized the urgent need to integrate Pakistan’s large informal economy—estimated at a staggering $100 to $140 billion—into the formal tax net. “Only a small fraction of this undocumented economy needs to be formalized to significantly expand the tax base,” said Ibrahim, drawing parallels with countries that have embraced telecom-led digitization and subsequently witnessed stronger revenue growth and improved governance.
In conclusion, Ibrahim issued a stark warning: treating the telecom sector merely as a source of revenue risks stalling Pakistan’s digital progress and compromising its long-term socioeconomic development. He urged the government to adopt a more strategic and supportive approach towards the industry in the upcoming budget.
