ISLAMABAD: Amid a strong backlash from the IT and telecom industry against the proposed increase in tax rates, the government is considering revisiting the measures proposed in the mini-budget.

Not only the five telecom companies have expressed their concerns and disappointment over the move, but even Minister for IT and Telecom Syed Aminul Haq is opposed to the proposed measures.

Sources in the ministry said the IT minister has conveyed the resentment of the stakeholders to Prime Minister Imran Khan. “The IT minister told the prime minister that an increase in tax on the telecom sector will have a negative impact on growth and investment,” sources claimed.

Meanwhile, PTCL, Jazz, Telenor, Ufone and Zong have warned that the proposed increases in taxation, if implemented, will significantly retard the role of the telecom industry in terms of GDP growth of Pakistan.

These companies in a joint letter to Finance Minister Shaukat Tarin and IT Minister Aminul Haq said that the smartphones connected through mobile broadband are the largest drivers of digitisation and an increase in their prices will decrease the affordability of the masses and reduce the usage of mobile internet. It added that Pakistan has one of the highest rates of taxation in the world.

Meanwhile, Jazz chief executive officer Aamir Ibrahim in a tweet on Tuesday said that “’it seems the country was not sound serious about the ‘Digital Pakistan initiative’ of Prime Minister Imran Khan, as total taxes on telecom has reached almost 35 per cent with the addition of 19.5pc GST on mobile calls.”

“While countries are subsidising internet services to strengthen broadband access for citizens, especially students, I am disappointed with talks about raising withholding tax (WHT) on cellular services to 15pc in Pakistan,” Mr Ibrahim said in his tweet message.

Moreover, the telecom industry said that the government was backtracking from its earlier commitments of reducing the WHT on mobile services.

The WHT was reduced from 12.5pc to 10pc in the 2021-22 budget, with the announcement that it will be brought down to 8pc in 2022-23.

Responding to a query, Finance Minister Shaukat Tarin told Dawn that a meeting has been planned with the IT ministry and industry stakeholders to listen to their concerns.

“IT is a very important sector and it is close to my heart, I will meet them and look into their problems and those that needs to be resolved will be taken care of,” Mr Tarin said.

According to the data released by the Pakistan Telecommunication Authority (PTA) out of 110 million internet users in the country, 107m are mobile broadband users.

The mini-budget has also proposed 17pc sales tax at import of plant, machinery and production line equipment for manufacturing of mobile phones valuing more than $200, laptop computers, notebooks, personal computers.

Published in Dawn, January 5th, 2022