Telecom Firms Call for Cut in Taxes in Budget
Staff Report
Islamabad: The income tax rate under Section 236 of the ITO 2001 currently stands at 15%, up from 12.5% following the Finance (Supplementary) Act 2022. Previously, the tax rate was set to drop to 8% from 2022 onward. Meanwhile, under the Federal Excise Duty (FED) Act 2005, the applicable rate has climbed from 16% to 19.5%. Since telecom products are already taxed at the point of sale, reducing these rates would encourage revenue growth rather than suppress it.
The carry-forward period for the minimum tax under Section 113 should also be extended back to five years from the current three, aligning with amendments introduced through the Finance Act 2021.
With the upcoming 5G rollout, telecom networks will rely heavily on lithium-ion and rechargeable batteries. However, telecom operators face high costs due to a complete reliance on imports, which are subject to heavy customs duties and taxes. To support the 5G rollout and improve infrastructure, the industry has urged the removal of the 5% regulatory duty on telecom power equipment, including network batteries.
Additionally, the sector has called for telecom power equipment to be excluded from retail valuation by the FBR, as these items are imported for in-house use rather than resale. It has also demanded an exemption from the 15% regulatory duty and 3.5% additional sales tax on SIM card imports due to the absence of local manufacturing. Furthermore, the industry seeks a reduction of the 9% regulatory duty on telecom equipment, including RAN, Core, and Transmission under HS Code 8517.6290, to 0%.
