Telecom Firms Urge Government For Income Tax Relaxation


Telecom companies have reached the government for billions of tax concessions to increase their own revenues. These companies had moved a summary through the Ministry of Information Technology and Telecommunication to the ECC for a number of tax relief measures including abolishing 12.5 percent advance tax.

Telecom Firms Urge Government For Income Tax Relaxation

The ECC on Thursday had deferred it for the next meeting, but some quarters are advocating the decision to be done in favor of these companies.

When this scribe contacted a senior official of the PTA, he said that the government should thoroughly observe their demands for tax incentives and also their services qualities. If the government wants to give them tax relief, then they should also be bound to pass on its benefits to the consumers, otherwise it will be just an act of financially bolstering the companies, while leaving consumers at their mercy.

He further said on the condition of anonymity that the authorities should keep a vigilant eye on these activities, as some decision maker are allegedly serving the interests of these companies and want to give them undue benefits.

He questioned, “Why the ministry is asking for tax relief for these companies? Whether the ECC discussed the performance of these companies?” Obviously, they did not. The ministry must also show to the decision makers the other side of the coin too while taking such an important decision.”

PTA has recently shown grave concern over their (Zong, Telenor, Jazz, Ufone etc) performances after monitoring their services in various parts of the country. Some have poor signal strength, call connection failure, poor quality service and overcharging.

The Regulatory authority is monitoring their performances and pinpoints their weaknesses and their acts of plundering the consumers, but the government is not talking it serious. Now instead of asking them for their poor services and overcharging, the government wants to give them tax incentives which will not benefit the consumers but the companies.

These companies always take refuge behind their CSR actives, as under the agreement they are bound to spend a certain portion of their income of CSR. But, now they are using it as a chip to take advantages and favors form the government in tax relief.

According to the summary that was presented in the ECC meeting the ministry has categorically signified their CSR activities during COVID-19 and in next sentence it has mentioned that the government had given relief to other sectors but not to telecom sector.

DEMAND FOR TAX AND OTHER INCENTIVES

In summary reduction of federal excise duty on telecom services from 17 percent to 16 percent, withdraw Rs250 issuance tax on sale of new SIM cards. The government may also accept Lahore high court judgement in favour of Ufone & Zong and implement it for all the mobile operators.

Furthermore, the ministry has also been proposed to introduce a simplified advance tax mechanism u/s 147 of ITO, 2001, and exemption from all withholding/collection provision under ITO, 2001. This will not result in any tax break for the industry. They stated that similar exemptions have already been afforded in the banking and oil industries.

The ministry also recommended to include telecom sector (all PTA licenses) in the division III of part III of the income tax ordinance to grant relief of 3 per cent minimum tax instead of 8 per cent  tax on all telecom services.

The ministry also recommended to include telecom sector (all PTA licenses) in the division III of part III of the income tax ordinance to grant relief of 3 per cent minimum tax instead of 8 per cent  tax on all telecom services.

Pakistan telecom companies are dependent to import various equipment under HS code 8517 and HS code 8544. It has also been proposed to abolish regulatory duty on these equipment and additional custom duty on raw material be brought down from current level of 20% and 7% to the level of 5 percent and 3 percent respectively. These proposals have also been recommended by the Prime Minister’ Task force on Information Technology and Telecom.

Check out? An Overview of Data Users, Mobile Phone Users and Telecom Industry in Pakistan By Jul-20

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