Tale of Taxes of Information, Technology and Telecom Sector

The Ministry of Finance was asked by the Minister of Information Technology and Telecom Sector to lower down the advance tax on mobile subscribers by 5 percent and to further reduce tax rate on mobile phones that are manufactured locally and are priced below 100$.

A meeting pertaining to taxes of IT and Telecom sector was presided by Federal Minister for Finance Miftah Ismail.

An assurance was given by the Minister to the representatives of telecom sector that lowering down the rate of advance tax is under consideration, it will be possible only after a final nod by the Prime Minister.

He further brought into the knowledge of the meeting members that if the advance tax is reduced by one percent, such a measure could cause a loss to the national exchequer in terms of an amount over Rs.5 billion.
A demand came from the stakeholders to the government in the form of reduction of advance tax on mobile subscribers by 5%.

An increase in the advance tax from 10 to 15 percent was made by the predecessor government through a mini budget.

The Ministry of Finance was asked by the Ministry of IT and Telecom to tax those mobile phone sets that are manufactured locally and are priced below $100.

However taxes on mobile sets that cost more than $100 should be increased. No objection came from the Ministry on the aforementioned proposal.

According to credible sources amongst the Telecom sector, a measuring tool to gauge the financial health of mobile operators i.e. average revenue per user(ARPU) per month, indicates that there was a drop from $9 in 2003 to $1 at present, which seems to be alarming.

In the rankings based upon ARPU the country stands at 235/238. As a consequence, quality of services are impacted in an adverse manner.

Furthermore, Jazz CEO Aamir Ibrahim was of the view that in the upcoming months the ARPU needs to double up if the required outcomes such as enhancement in both business and further investment in quality or coverage needs to be achieved.

Also Read: Telenor and Jazz Seek Reduction in Withholding Tax