National exchequer: Telecom contributes Rs100b annually in taxes
The telecom sector has been contributing over Rs100 billion annually to the national exchequer in the form of taxes during the last few years, according to official data.
The total contribution was over Rs109 billion in fiscal 2010 of which almost half came from General Sales Tax (GST) while the rest from duties, regulatory charges and other taxes. Contribution rose 15% to Rs56.3 billion in the first half of fiscal 2011 against Rs49 billion in the same period last year.
Telecom sector, the highest taxed industry, contributes more than 90% share in total taxes by the services sector to the federal divisible pool which is being diverted to provinces under 18th Amendment, according to an estimate.
The GST collection in telecom services mainly comes from the mobile sector and its share in total GST collection is 86% followed by basic services as 11%.
The activation tax contribution to the national exchequer fell to Rs3 billion in the first half of fiscal 2011 from the preceding year’s Rs4 billion. The core reason for the drop in the activation tax is market maturity.
Published in The Express Tribune, July 9th, 2011.
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Compliment to FBR to the collection from the services sector in the Telecommunication services which is telephony, and internet, contributing to the Finance Ministry. This is excellent as far as the role of FBR, and the Finance Ministry. As we know taxation on Telecommunication services, particularly internet is causing great barrier in the auction of spectrum and award of license for 3rd/4th Generation Mobile Services which means high speed mobile communication. The service cost will be so high in view of the very low number of users, based on the service cost due to taxation. Should taxation on internet services be abolished we will see a flood of foreign direct investment amounting to billions of Rupees in the shape of Foreign Direct Investment for participation of the existing companies/operators or new companies with LTE high speed mobile internet technology from China, Korea. Our growth is dependent on the infrastructure which is communication, low cost electricity for a potential investor whether tourist, or investor. Suggest Ministry of Finance to review the taxation of telephony, and internet to witness the boom in foreign direct invest.
Thanks to Musharraf for providing them with open ground to grow and prosper..!