Cellular Mobile Operators (CMOs) have recommended the elimination of Subscriber Identity Module (SIM) card activation tax along with customs duties on the import of mobile phones and telecom equipment, demanded on Thursday in a five-point telecom budget 2015 proposal.
The CMOs also advised the Federal Board of Revenue (FBR) to consider telecom sector as an industry, a status already given by the MoIT and the Ministry of Industries.
The CMOs stressed that a centralized system of tax is required evade double taxation and rationalization of the Federal Excise Duty (FED) and withholding tax, which will ultimately benefit the ordinary consumers.
The telecom sector requested to lower the taxation charges on all operators as high taxes are hindering the growth of mobile broadband due to which public suffers and ultimately lowering the revenues for both the government and the industry.
Mobile sector in Pakistan has enabled almost 130 million people to be connected and have access to latest information, the rest of 60 million don’t have access to mobile connectivity. The CMOs argued that only by lowering the taxes they can afford the infrastructure to increase their network coverages in order to facilitate many people.
As also mentioned in GSMA report, Pakistan stands fourth in the ranking of highly paid tax countries internationally. In FY14, the telecom sector’s contribution to the national exchequer amounted to Rs130 billion.
Eliminating income tax on imports can decrease the cost of electronic network, said by the CMOs, which will increase economic feasibility of infrastructure investment in distant areas to grow third-generation (3G) mobile network.
The CMOs also advised to eliminate the taxes on SIM activation to Rs150 and said:
“When the SIM activation tax was reduced in the past, mobile penetration increased, causing an upsurge in government’s tax revenues.”
There is dire need to design well the telecom budget 2015, which can benefit both the industry and government.
The overall demand of CMOs was to harmonize the connection between federal and provincial sales tax laws. In the end, the CMOs advised that SRO 575 should be reinstated, which will released the industry from sales tax and customs duty on the import of telecom equipment.