Telecom operators and mobile phone manufacturers are expressing concerns about upcoming taxation measures that could lead to higher service and device costs once the budget is approved. Already, traders are marking up prices on existing stocks.
In a letter to IT and Telecom State Minister Shaza Fatima, the Telecom Association of Pakistan (TOA) has contested the proposed Finance Bill 2024-25. They specifically criticize the planned 75% advance tax collection on mobile services for non-filers, calling it impractical given current infrastructure limitations.
The association represents all major players including cellular mobile operators, international operators, wireless local loop operators, and fixed-line operators.
They argue against penalizing telecom operators for consumers’ tax non-compliance, stating operators are facilitators rather than liable parties in tax disputes.
The industry warns that these fiscal measures could severely harm the sector and undermine the government’s “Digital Pakistan” initiative.
Earlier, the Global System for Mobile Communications Association (GSMA) also raised alarms over new taxes on mobile handsets in the upcoming budget, fearing it would deter investor confidence in the Pakistani market.
Meanwhile, mobile phone assemblers are similarly apprehensive about increased taxes and unfulfilled promises.
Mian Abdul Rehman, Chairman of the Pakistan Mobile Phones Manufacturers Association (PMPMA), predicts that implementing these tax proposals after July 1 will raise mobile service costs and reduce access to affordable handsets.
He notes that even budget-friendly mobile phones will become more expensive due to the new taxation.
The government’s proposal to hike sales tax on handsets priced below $500 is expected to hinder digital penetration among low-income groups and exacerbate the digital divide, particularly impacting women in these demographics.
Mr. Rehman highlights the retention of a 25% duty on imported parts for mobile manufacturing while exempting allied items like chargers and Bluetooth devices from such duties. This policy, he argues, discourages local assembly and contradicts government goals to boost mobile exports from Pakistan.
