Taxes on mobile handsets to hit investors’ trust

Budget proposals include imposition of sales tax on mobile handsets below $500 and 75% advance tax on telecom usage

Our Correspondent June 14, 2024
Lower corporate tax rates are associated with higher investment-to-GDP and State GDP growth, more rapid employment growth and most importantly higher government tax revenues and foreign exchange reserves. PHOTO:FILE


The Global System for Mobile Communications Association (GSMA) has aired concern over the imposition of taxes on mobile handsets in Pakistan’s budget for fiscal year 2024-25, terming it a move that will shake the confidence of investors interested in entering the Pakistani market.

The budget proposals regarding the imposition of sales tax on mobile handsets below $500 and the imposition of 75% advance tax on telecom usage for persons mentioned in the Income Tax General Order would adversely impact the provision of essential connectivity, digitalisation initiatives and internet use in the country. “Heavy taxation has discouraged investors from entering Pakistan’s market, as the cost of doing business continues to increase, return on investments lowers and investor confidence decreases,” Julian Gorman, GSMA Head of Asia-Pacific, said while talking to media on Thursday.

He said Pakistan was “going flat” while the rest of the world was moving up in digitalisation. “The big thing missing is ‘vision’,” he said, adding that Pakistan lacked vision and direction towards digitalisation to achieve targets of the Digital Pakistan initiative.

He said that Pakistan had significant potential for digital growth as well as to become a leader in digital economy due to its large well-trained youth.

“However, the government apparatus as well as essential services are not up to the digital potential available in the country; e-governance adoption will increase the performance of governments apart from making people more connected,” Gorman said.

On the occasion, he highlighted the importance of the third “GSMA Digital Nation Summit” to be held in Islamabad in August.

This is the first such international event being held by the GSMA in Pakistan and it will bring different stakeholders including investors, innovators and regulatory authorities of different countries under one roof.

“Pakistan has the potential to become a knowledge-based economy where innovation and technology drive economic growth and enhance governance,” he said but added that there was a need for implementation of all the regulatory actions taken in that regard. He stressed that mobile phone penetration in Pakistan stood at 40% but it should be more than 70% in a country where a large number of youth were present.


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