The telecom sector in Pakistan is facing a wide range of taxation, pricing, and regulatory challenges impacting its growth, sustainability, and competitiveness. Some of these issues also extend into related sectors, such as solar infrastructure and local manufacturing, and together, they affect the broader business landscape in the country.

One of the main challenges is the change in the Advance Income Tax (AIT) rate. While the Finance Act in December 2021 increased the rate from 10 per cent to 15pc, it was later reduced to 10pc for FY22 and 8pc for FY23. This tax only applies to tax filers, but most telecom users in the country are non-filers. As a result, the burden of the tax falls on consumers who are not even legally required to pay it, leading to questions about fairness and implementation.

Telecom licenses and spectrum renewals also require a separate regulatory and tax treatment. Currently, these are not clearly distinguished in financial handling, causing confusion and delays. A streamlined framework could bring better transparency and faster processing.

There is also a lack of uniformity in General Sales Tax (GST) and Federal Excise Duty (FED) rates across the provinces. For example, in 2021, the federal government reduced the FED to 16pc, but this was only implemented in the federal capital. The provinces continued charging 19.5pc, and........

© Dawn Business