PTA, telecom sector deposit Rs109b in taxes

According to Pakistan Telecommunication Authority's (PTA) Quarterly Report 2011 the contribution of telecom sector to national exchequer through taxes, duties and regulatory charges kept growing. At the end of Fiscal Year (FY) 2010 the total contribution was over Rs109 billion of which almost 50% came from GST.

In the first half of the FY2011 the total contribution to national exchequer was Rs56.3 billion which was almost Rs. 49 billion in the first half of FY2010 showing growth of 15% since last year.

According to an estimate, telecom sector contributes more than 90% share in total taxes by the services sector of Pakistan which is now being diverted to provinces under 18th Amendment.

Similarly, share of GST in total contribution from telecom sector is also very impressive where almost 50% of total contribution comes from GST collection. Only in the 1st half of FY 2010-11, total GST collection is Rs23 billion which was Rs21 billion in the same period of FY 2010.

GST collection in telecom services mainly came from mobile sector and its share in total GST collection is 86% followed by basic services as 11%.

The Activation Tax contribution to national exchequer stands at Rs3 billion at the end of 1st half of FY2010-11 which was Rs. 4 billion in the same period last year. Main reason for drop in the activation tax is due to market maturity, there is time for the Government to abolish this tax on operators to further strengthen its growth whereas in order to increase GST the government needs to reduce the existing 19.5% rate, so that usage could be enhanced, which would result in better GST collection.

Report says that in contrast to the Pakistan economic situation the growth of telecom sector remained healthy and positive. The total teledensity growth kept oscillating between highs and lows till the end of year.

Total teledensity including mobile, fixed and WLL services stood at 65.2%. The teledensity growth in the first half of the year (Jan to June 10) was 0.9% whereas in the second half of the year (July-Dec10) the growth was 1.7%, showing more stability and resilience as compared to 1st half of the year. Total teledensity of the country grew by more than 2.67% in the last one year.

The PTA report further says that the telecom sector has been experiencing decreasing ARPU's, exorbitant advertisement budgets, power crises, and negative net profits, aggressive competition, market saturation and decreasing exchange rates, the financial health of the sector remained stable. Telecom regulator continued to facilitate the sector in regulatory issues and maintaining competition in the sector. In this regard, PTA has taken many initiatives and launches National Rabta Information Portal, survey to check power level of mobile towers, billing verification of mobile operators, curbing the menace of illegal traffic, introduced online complaint management system, and other consumer friendly initiatives taken by PTA.