GSMA Urges Pakistan to Reduce Taxes on Mobile Services in Next Budget

The Global System for Mobile Communications Association (GSMA) has asked the federal government to reduce taxes on the use of mobile services in the country. GSMA in a pre-budget report said Pakistan has the highest combined tax burden on mobile services among nine regional and peer countries, with users paying 33 percent in taxes (18% sales tax + 15% advance income tax) on mobile recharges. The report shows Pakistan’s mobile taxation surpasses Nepal (26%), Sri Lanka (23%), India (18%), Philippines (12%), Indonesia (11%), Singapore (9%), Thailand (7%), and Malaysia (6%). GSMA warned that these high sector-specific taxes are constraining both consumer affordability and industry investment. GSMA recommended that the government reduce the advance tax on mobile recharges from 15 percent to 12.5 percent and sales tax on mobile services from 18 percent to 16 percent. It also advised reducing or removing import duties on mobile handsets. Other proposed measures include cutting advance income tax on telecom operators from 5.5 percent to 1 percent, eliminating the 4 percent minimum tax on the sector, and exempting telecom license fees and spectrum renewals from advance tax. GSMA further urged the government to fully exempt the telecom sector from withholding taxes, similar to exemptions given to the banking and oil industries, and to abolish the 75 percent advance tax rate on non-filers.