While, the year 2015 was a happening year in telecoms but the foreign direct investment (FDI) did not see any major growth due to the fact that all such FDI becuase of NGMSA happened in the previous year; the cellular operators are still struggling to increase their average revenue per user (ARPU) to become more competitive. At the end of the year, coverage of 3G/4G services is still far from satisfactory from a consumer and industry perceptive.
Even after a very challenging year, the overall performance of telecom sector is quite satisfactory. According to the annual recent report of Pakistan Telecommunication Authority (PTA) the sector has contributed almost 745 billion Rupees to the national depository in terms of regulatory duties and taxes during the last five years.
Telecom Sector Contributes Rs.745bln to National Exchequer: PTA
No doubt, that the telecom sector is a significant source of revenue generation for the government in terms of many attributes. The major attributes are:
- Initial and annual licence fees
- Initial and annual spectrum fees
- Universal Service Fund (USF)
- Research and Development (R&D) Fund contributions
- Access Promotion Contribution(APC) for USF Numbering Charges licence
- Application fee
- Direct and indirect taxes
- General sales tax (GST)
- Federal excise duty (FED)
- SIM activation tax
- Advance withholding tax (WHT)
- sales tax on mobile handsets
- Customs duties and much more.
By comparing the telecom sector taxes and levies with other regional countries, PTA disclosed that it’s higher in Pakistan. The relevant bodies of telecom sector believe that the rationalization of taxes will enhance the growth and it will also lead to collect the better government levies in the long run.
Therefore in this regard, the telecom industry has submitted tax proposals for consideration to the government. The aim of the proposal is review the tax deduction system by Federal Bureau of Revenue (FBR) and it should be rationalized in order to save the poor people from undue taxation.