Pakistan Reschedules FY2026-27 Budget Presentation to June 10
June 3, 2026
MoITT and industry urge broad tax relief, cut withholding, lower duties on equipment and handset parts to boost 5G rollout, local manufacturing and affordability across Pakistan.
Pakistan’s telecom sector is pushing for a sweeping fiscal reprieve ahead of the FY27 budget, saying tax relief is crucial to accelerate 5G deployment and fibre expansion. The Ministry of Information Technology and Telecommunication (MoITT) and industry groups have submitted proposals asking for exemptions, lower duties and other incentives aimed at unlocking fresh investment.
MoITT sources told Business Recorder the ministry recommended exempting the sector from the 6% withholding tax under Section 153, arguing the upfront levy strains operator liquidity. “The telecom sector is fully compliant with tax laws and regulations. There is a strong case for exempting it from withholding tax to improve liquidity and encourage further investment,” an official said.
Operators also seek cuts in advance income tax on mobile services, slashes on customs and regulatory duties for imported telecom equipment, and reduced taxes on handset components to support local assembly. Industry estimates show cumulative levies push the tax burden on prepaid services close to 37%, making devices and connectivity less affordable for many consumers.
The industry argues that easing duties on critical inputs including optic fibre cable and 5G equipment would materially lower deployment costs. One proposal calls for customs duties on 5G gear to be waived outright; another recommends cutting optic fibre import levies from current highs (up to 67% in some cases) to single digits to speed fibre rollout.
Beyond immediate cost relief, stakeholders expect long‑term gains. They say lower taxes would improve cash flow for operators, encourage capital expenditure and spur broader economic activity that ultimately raises tax receipts. The GSMA has weighed in, urging a predictable, balanced fiscal framework rather than short‑term measures alone.
MoITT highlighted recent sector investments of about $5 billion over five years and Rs1.7 trillion in tax contributions during that period to justify a more investment friendly approach. Officials noted the sector contributes nearly Rs400 billion annually in taxes while serving roughly 200 million subscribers.
Industry players warned that without tax rationalisation, Pakistan risks lagging in next‑generation connectivity. “Spectrum measures alone will not be sufficient to achieve Pakistan’s digital ambitions,” a GSMA representative said in a statement, calling fiscal reform essential to expand access and affordability.
With the budget process underway, the coming weeks will test whether policymakers view the telecom sector primarily as a revenue source or as a strategic enabler of digital growth.
