- Advertisement -
ISLAMABAD, Jun 05 (APP): Aamir Ibrahim, CEO of Jazz and Chairman of the Telecom Operators Association, has called on the government to reduce the tax burden on the telecom sector and take urgent steps to bring the informal economy into the tax net.
He emphasized that digital connectivity is now as essential as roads, electricity, and water, and should be treated as a basic utility—not a luxury.
The Telecom Operators Association, which Ibrahim represents, has submitted a set of budget proposals aimed at creating a more balanced and growth-oriented fiscal regime for the telecom sector. The proposals argue that the current tax structure, which includes multiple layers of indirect and advance taxes, is undermining investment, slowing innovation, and limiting the sector’s ability to support national development goals.
“The industry has recommended adding a clause to the Second Schedule of the Income Tax Ordinance to exempt telecom operators from withholding tax deductions and collections,” said Aamir. “This would simplify compliance and potentially eliminate the need for other compensatory tax measures currently being debated.”
The proposal also urged that the 4% withholding tax on telecom services under Section 153 be made adjustable rather than treated as a minimum tax. Similarly, the 10% advance income tax on spectrum auctions and renewals under Section 236A should be abolished, and the time period for carrying forward minimum tax credits under Section 113 should be restored to five years—reversing the change made in the Finance Act 2024.”
Other recommendations include reversing recent amendments that allow tax commissioners to reject advance tax estimates filed by companies, and eliminating the requirement for a 30% upfront tax deposit to obtain a stay order from the High Court under Section 133(10).
The proposals also call for rationalizing duties on telecom equipment and aligning customs valuation with global norms by using transaction value (Section 25) instead of reference values (Section 25D) under the Customs Act 1969. The operators seek abolition of the 75% advance tax on non-filers (Sections 114B and 236), a reduction in advance income tax under Section 236, lower duties on raw materials for local optical fiber cable manufacturing, and cuts in sales tax and Federal Excise Duty (FED) on telecom services.
“Nearly 35% of every mobile recharge goes toward taxes and duties, making digital access increasingly unaffordable for low-income users,” said Aamir “At the same time, Pakistan’s tax burden continues to fall on a narrow base of compliant individuals and businesses, while an estimated 35% of the economy—worth between $100 and $140 billion—remains undocumented. Even formalizing a small portion of this could significantly broaden the revenue base without stifling growth.”
In comparison, he added, the undocumented economy accounts for only about 5% in the United States and roughly 25% in India. Countries that have embraced digitization have demonstrated stronger tax collection, greater transparency, and more sustainable growth.
Despite this, digital payment adoption in Pakistan remains limited. The country has around 2 million credit cards and just 50,000 acceptance points—serving a market of over 5 million retail outlets. QR code adoption remains low, even though it’s a low-cost, efficient method for transactions. Many traders are reluctant to adopt it due to concerns about transparency.
Aamir reiterated that telecom is not just about connectivity or entertainment—it enables e-commerce, mobile banking, online education, telehealth, and public service delivery. Treating the sector merely as a source of revenue, he warned, would harm not just the economy but the social fabric of the country.