Excessive Telecom Taxes Leads to Drop in DFI

Shahid Rasheed Butt, Investor Islamabad Chamber of Small Traders, on Sunday revealed that greater telecom taxes were disheartening users and companies which was ensuing in reduced adoption.

Excessive Telecom Taxes Leads to Drop in DFI

Also Read: Huge Amount of Taxes Causing Hurdles in the Growth of Internet Industry: Wasim Ahmad

“Pakistan’s telecom sector is second highest taxed in the world which has discouraged investors resulting in lower 3G and 4G penetration and dramatic drop in direct foreign investment (DFI).”

Shahid Rasheed Butt said in a press statement.

Rendering to a study, a price surge of 1 percent lead towards a decline in depletion by consumers of ICT things and services of anyplace from 0.2 percent to 3.8 percent, he further added.

According to the World Bank,

“Every 10 percent penetration of broadband contributed 1.38 percent to gross domestic product.”

The situation in Pakistan is quite different where the telecom industry is under burden of taxes. Direct foreign investment (DFI) dropped by 72 percent for the fiscal year ending June 30, whereas the telecom industry subsidized 50 percent less in taxes compared to the previous year, Shahid Rasheed informed.

Due to Biometric Verification System (BVS) total number of active SIMs dropped down that resulted in overall connection numbers plummeting by 18 percent while it cost telecom industry 60 million dollars, he also added.

Shahid further said that cell phones and mobile internet is important tool to diminish poverty, thus policymakers should deliberate providing reprieve to telecom industry winding under heavy taxation. If the taxes are not compensated it will affect the business of telecom operators.

Also Read: Report: Growth in Revenues is Likely to Enhance Earning of Telecom Operators

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