How Telecom Taxation is Effecting Pakistan’s Economy

Mobile telecommunications was introduced in Pakistan in 1991, and from that time the sector has witnessed continuous expansion. The telecom sector is blooming, and in the last two decades, the mobile industry in Pakistan has given access to transformative technologies to more than 60 million users. This ever-increasing access has a wide range of benefits to the home economy and society and is directly helping economic growth. However, since the start, Telecom Taxation has always remained a point of discussion for some good reasons.

Now mobile networks cover 85 percent of the total population of Pakistan with four mobile operators competing. Thanks to them that millions of Pakistani are enjoying their services.

Telecom Taxation- A Hurdle Towards the Development

However, one should not oversee the fact that the total number of new subscribers in Pakistan remains less when compared to other regions of the world. Due to market subscriber base, Pakistan is left behind its neighbouring countries when subscriber penetration is considered. There is only one reason behind it that is the mobile sector of Pakistan is heavily taxed with various taxes levied both on mobile operators and consumers.

Some of the taxes are as follows: the tax levied on SIM card sale, Provincial Sales Taxand the Federal Excise Duty on usage. Due to all this, the overall mobile sector remains at a disadvantage when compared to other industries.

Whereas the taxes payable by consumers directly impact the affordability of services which in turn affect the consumer and the company also. It is the worst barrier when it comes to access basic telecom services such as mobile internet and broadband.

Mobile services have a significant effect on the Pakistani economy. Having broader impacts on the economy, it helps to increase living standards in Pakistan and improve the country’s international competitiveness which includes the direct contribution made by mobile operators. The contribution of mobile operators is estimated at seven % of Pakistan’s total tax revenues, and the tax revenues caused by the extensive ecosystem of industries established by mobile services.

Let’s accept that mobile operators have the potential to further contribute to Pakistan’s economic growth which is only possible when the taxation on this sector is reduced.

Editor’s Recommendation: Telecom Foundation to establish TF schools in rural areas