GSMA Recommends Abolishment of Advance Income Tax on Telecom Services

Global Mobile Industry Association (GSMA) has proposed the gradual abolishment of Advance Income Tax (AIT) on telecom services. According to GSMA, it will improve the affordability of mobile services and encourage the adoption of communication services in the country.

GSMA Recommends Abolishment of Advance Income Tax on Telecom Services

See Also: GSMA Asks Govt to Reverse Tax Hike on Telecom Services

GSMA wrote a letter to the Federal Board of Revenue (FBR) and the Minister for IT & Telecom Aminul Haq and recommended the reduction of AIT from 15 per cent to 8pc in the upcoming federal budget. It further highlighted that mobile consumers face a heavy burden of sector-specific taxes in addition to general taxes.

It is worth mentioning here that there is a 19.5pc sales tax on mobile services plus a 15pc AIT making it the highest tax in the region. No doubt, a reduction in consumer taxes would generate higher government tax revenue and GDP.

The GSMA also revealed that the tax contribution of the mobile sector in Pakistan remains considerably higher than the average for Asia. It added that in 2020, the total tax contribution of the mobile sector, amounted to Rs 170bn, equivalent to 38pc of mobile sector revenues.

But it was substantially higher than the Asia Pacific average of 24pc and the global average of 22pc.

The GSMA further recommends that the 100pc cash margin restriction on imports should be removed for telecom equipment.

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