Taxing Times: Telecom Sector Buzzes with Worries Over Proposed Changes

The telecom sector in Pakistan is expressing deep concern over the potential implications of the proposed amendments outlined in Finance Bill 24/25 to the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990. These amendments have raised significant unease among operators, consumers, and stakeholders within the digital landscape of the country

One major concern revolves around penalties for non-compliance with income tax orders related to SIM blocking. Telecom operators face severe fines under this proposal, despite the requirement that SIM blocking can only occur with authorization from the Pakistan Telecommunication Authority (PTA). This discrepancy raises legal and operational challenges, potentially leading to litigation and operational inefficiencies.

Moreover, singling out telecom operators for such penalties, while other sectors face different compliance standards, is viewed as discriminatory and burdensome. Operators already play a critical role in facilitating tax collection and compliance efforts.

It is also proposed to impose a 75% advance withholding tax (AIT) exclusively on prepaid cards and electronic airtime for non-filers. This unprecedented tax rate requires significant IT infrastructure upgrades to differentiate between filers and non-filers at the point of sale. Delaying tax collection until end-user identification further complicates compliance and contradicts efficient revenue collection objectives.

Furthermore, imposing an 18% sales tax on imported handsets and CKD units irrespective of their value could hinder efforts to enhance digital inclusion. As smartphones are the primary means of internet access for most Pakistanis, increased handset prices may limit affordability and hinder efforts to expand 4G penetration.

The telecom sector is advocating for fair taxation policies that support industry growth and digital inclusion that address these concerns and is calling to refine the proposed amendments to ensure they promote innovation, investment, and sustainable development in Pakistan’s digital economy.

About the Author:
Nouman Ahmad Noor, your friendly Clinical Psychologist with big dreams! Juggling the art of unraveling minds, aspiring to craft captivating novels, and fueling the next generation of knowledge as a future professor. Join me on this exciting journey of understanding minds and weaving tales!