Telecom sector contributes Rs745b to national kitty

STAFF REPORT ISB: Telecom sector has contributed an amount of Rs. 745 billion to national exchequer in terms of regulatory duties and taxes during last five years.

A higher contribution of Rs. 243.8 billion was made during 2013-14 due to Pakistan Telecommunication Authoritys (PTA) extraordinary deposits of Rs. 96.5 billion out of total value of 3G and 4G spectrum auction in April 2014.

In 2014-15, the telecom sector contributed Rs. 126.6 billion to national exchequer in terms of regulatory duties and taxes.

The sector is a significant source of revenue generation for government in terms of initial and annual license fees, initial and annual spectrum fees, Universal Service Fund (USF) and Research and Development (RandD) Fund contributions, Access Promotion Contribution (APC) for USF, Numbering Charges, license application fee etc. and taxes including General Sales Tax (GST)/Federal Excise Duty (FED), SIM Activation Tax, Advance/Withholding Tax (WHT), sales tax on mobile handsets, custom duties and other taxes.

PTAs recent annual report said overall telecom sector taxes and levies in Pakistan are considered higher compared to taxes on telecom services in comparable countries. Further, GST (19.5% in Punjab and KPK, 18 % in Sindh and 18.5 % in rest of Pakistan) and WHT (14 %) on telecom services are much higher as compared to average 16 % GST and 10 % WHT in other sectors.

PTA and telecom industry believe that rationalization of taxes on telecom sector will result in enhanced sector growth which may lead to better collections for government levies in the long run.

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