The Ministry of Information Technology and Telecommunication has proposed a broad package of tax incentives for the telecom sector, including exemption from withholding tax, lower import duties on telecom equipment and reduced taxes on mobile handset components, in an effort to boost investment, create jobs and improve digital access across Pakistan.
According to official sources, the ministry has urged the government to ease the tax burden on the industry, arguing that telecom services have become central to Pakistan’s digital economy and wider economic growth.
Officials said the sector has invested around 5 billion dollars over the past five years and contributed about Rs1.7 trillion in taxes during the same period. It currently adds nearly Rs400 billion annually to the national exchequer and serves close to 200 million subscribers nationwide.
Sources said the ministry has specifically called for removal of the existing 6 percent withholding tax, which is collected in advance and later adjusted through a lengthy reconciliation process. Officials argue this system places pressure on operators by reducing liquidity and forcing upfront payments before final assessments are completed.
The proposal also includes a reduction in customs duties, additional customs duties and regulatory duties on imported telecom equipment. The ministry said such charges, usually applied to luxury goods, should not be imposed on infrastructure that supports essential services like education, healthcare and business connectivity.
It also recommends lowering taxes on components used in local manufacturing and assembly of mobile phones. Officials believe this would make smartphones more affordable, encourage investment in domestic production and expand access to digital tools for lower-income groups.
Industry stakeholders have long called for a more supportive tax environment to improve broadband coverage and prepare for next-generation technologies such as 5G. The ministry believes the proposed measures could attract investment, improve services and strengthen Pakistan’s digital ecosystem.
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