Telcos Demand Tax Cuts, and Acceleration in 5G

The Telecom Operators Association (ToA) has proposed budget proposals for the fiscal year 2025-26, emphasizing tax relief, policy amendments, and exemptions from withholding taxes. Their goal is to ease financial and regulatory pressures on the telecom sector, allowing for greater investment in digital infrastructure and economic growth.

One of the key concerns is the amendment to Section 147 of the Income Tax Ordinance, which gives tax authorities the power to reject advance tax estimates filed by telecom companies. ToA argues that this has led to uncertainty, increased litigation, and business disruptions. They are also calling for the restoration of a fair dispute resolution mechanism, ensuring taxpayers can appeal decisions.

Another major request is an exemption from withholding tax, similar to what the banking and oil sectors receive. Telecom companies already pay quarterly advance taxes, so this exemption wouldn’t impact government revenue but would simplify compliance. Additionally, ToA is advocating for reductions in advance income tax and federal excise duty, which currently make telecom services more expensive for consumers.

Beyond taxation, they are urging the government to ease regulatory duties on essential telecom equipment, SIM cards, and network batteries, which are crucial for 5G expansion. The government is expected to review these proposals, but it remains unclear which ones will be accepted.