Pakistan’s telecom cellular companies are now pressing the government for reversing the increase in withholding tax on telecom services as it has a massive impact of almost PKR 18 billion per year for the operators. The telecom industry regards it as destructive to the digitalization drive for the economy and disables the ‘Digital Pakistan’ vision. According to reports, the detailed budget proposals would be shared once the new ministers for Information Technology and Finance assume their charge.
New Government Would be Requested to Reduce the Withholding Tax on Cellular Services
Furthermore, the previous government had announced a roadmap for the telecom sector in the last budget by decreasing the withholding tax from 12.5 percent to 10 percent and was supposed to further lower it from July 1, 2022, to 8 percent. However, the government later reversed its decisions in January 2022. Moreover, it has huge implications for the telecom sector and the newly elected government would be requested to reduce the withholding tax to be imposed on the cellular services.
Only 2.9 Million People File Income Tax Returns in Pakistan
Out of the population of 220 million, only around 2.9 million people file income tax returns in Pakistan, which is one percent of the total population. Even though a majority of the country’s population has a non-taxable income, these people are paying withholding tax, which they can never claim. “The new government should ensure consistency in policies to facilitate investment in the telecom sector”, the official added.
“Growth in revenue is mainly driven by strong performance in the consumer segment led by fixed broadband, mobile data, business solutions and microfinance services, despite the challenges of increase in advance income tax and reduction in mobile termination rates (MTR),” stated PTCL Chief Financial Officer (CFO) Nadeem Khan.
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