Government Considers Major Telecom Tax Cuts to Accelerate Broadband Expansion and 5G Rollout

The federal government is actively considering significant tax relief measures for Pakistan’s telecom and broadband sector in the upcoming FY2026-27 budget, including a sharp reduction in import duties on fiber-optic cable and possible cuts to taxes on internet services.

According to informed sources, policymakers are evaluating a proposal to reduce the current cumulative duty and tax structure on imports of fiber-optic cable from nearly 60 percent to approximately 5 percent. The proposed move is aimed at encouraging telecom operators and internet service providers to rapidly expand Fiber-to-the-Site (FTTS) infrastructure across the country.

Officials familiar with the discussions said the government is also reviewing options to reduce taxes on internet services in an effort to make broadband more affordable under Pakistan’s broader “Digital Pakistan” vision.

Currently, internet consumers face around 19.5 percent in provincial taxes alongside a 12.5 percent federal withholding tax, significantly increasing broadband costs for end users.

Industry stakeholders have long argued that the existing tax structure on telecom infrastructure and internet services has slowed broadband penetration, discouraged investment, and limited digital inclusion, particularly in underserved and rural areas.

Fiber Expansion Seen as Critical for 5G Success

Sources said reducing fiber optic import duties is primarily intended to lower infrastructure deployment costs and accelerate nationwide fiberization, which industry experts consider essential for the successful rollout of next-generation 5G services.

Telecom analysts maintain that without large-scale fiber network expansion, Pakistan may struggle to fully unlock the commercial, technological, and economic benefits of 5G connectivity.

Officials involved in the ongoing budget consultations said easing taxes on digital services is also being considered to stimulate internet adoption, support Pakistan’s growing IT and freelancing sectors, and improve access to affordable high-speed internet nationwide.

“The government recognizes that affordable broadband and strong digital infrastructure are essential for economic growth and future competitiveness,” a senior official familiar with the discussions said, adding that final decisions would be made during FY2026-27 budget deliberations.

Industry Welcomes Possible Relief Measures

Telecom industry representatives have welcomed the potential measures, saying reduced import duties and lower internet taxation could attract fresh investment into broadband infrastructure, improve service quality, and accelerate connectivity expansion across Pakistan.

Upon discussing the matter with Shahzad Arshad, Chairman of the Wireless and Internet Service Providers Association of Pakistan (WISPAP), he described the reported developments as a highly encouraging and progressive step for Pakistan’s telecom and internet industry.

He stated that reducing import duties on fiber optic cable and lowering taxes on internet services could significantly accelerate broadband expansion, improve affordability for consumers, and strengthen the foundation for future 5G infrastructure.

Arshad further said such policy decisions would represent a major step toward achieving the goals of the Digital Pakistan initiative by enabling wider access to reliable, high-speed internet connectivity across both urban and rural communities.

The upcoming federal budget is expected to place increased emphasis on digital infrastructure development as Pakistan moves toward future spectrum auctions and eventual commercial 5G deployment.

Also read:

Pakistan Unveils Nationwide 5G Rollout Plan with Faster Internet Speed Targets