According to the first quarterly report of fiscal year (FY) 2016, State bank blames that the major reason behind lower mobile and broadband usage in the country is Heavy taxation on the telecommunications sector.
SBP Blames Heavy Taxation For Low Mobile and Broadband Usage
The broadband users are increasing very rapidly day by day in Pakistan but the data users are not increasing with the same rate. The reason for this slow rate is heavy taxation on broadband usage.
According to the report:
The country presents a huge market of about 130 million people that needs broadband services; currently, there are 21.2 million broadband users [subscriptions],”
The SBP said in its quarterly report
“Despite being among top 10 countries of the world in terms of number of mobile users, the share of broadband and mobile users in Pakistan is still low,”
According to the Central Bank following key taxes directly impact consumers and providers of mobile industry in Pakistan:
- 19.5% GST and 14% withholding tax on mobile services
- Custom duty of Rs250 on import of mobile handsets
- 19.5% tax on broadband Internet services exceeding 2 Megabits per second speed, which is imposed in the Punjab
- 18% tax on broadband bill exceeding Rs1,500, which is imposed in Sindh
- 10% duty on import of equipment used for voice reception, switching and routing of data and corporate tax of 32%.
Explaining the major reason for low internet and cellular adoption, the central bank said,
“Heavy taxation in this sector is the major reason of lower mobile and broadband usage,” which is in addition to other issues: quality of services, complex price structure, and high charges of devices
The report said:
for every 10% increase in the penetration of broadband services, there is an increase in economic growth of 1.3 percentage points. “Therefore, we believe heavy taxation on mobile services in Pakistan does not bode well for economic growth in the country,”
Source: Express Tribune