STAFF REPORT ISB: Three of Pakistans operators have targeted the governments proposed sales tax on mobile handsets and SIM cards.
Mobilink, Telenor and Warid have termed the FBRs device tax “irrational, illogical, arbitrary and incoherent”. They note that it not only goes against the countrys constitution, but would also be highly difficult to implement.
Pakistan already taxes the import and supply of mobile handsets, but avoidance of this duty is common enough to be problematic. In an effort to combat this, the FDR has proposed extending import duty to SIM cards.
However, the three operators – which collectively have a market share of 64% – have written to the FDR explaining that meeting the new tax requirements would be costly for operators without delivering a benefit.
They argue that there would be a boom in devices with fake IMEI numbers as consumers look for ways to avoid the tax, and that this in turn would create tracking challenges for law enforcement agencies.
A joint statement from the operators read: “The only solution for the government is to crack down on smuggling and charge sales tax at the import and supply stage.”
A ministry committee founded to examine the impact of higher-rate taxes noted that high tax bills had adversely affected operator revenue and diminished their interest in acquiring further 3G/4G spectrum – much to the chagrin of the government, which is keen to hold fresh auctions.