Telecom Should be Taxed for Human Basic Right Anusha

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Minister of State for IT & Telecommunication Anusha Rehman said while briefing a parliamentary panel that IT and communication is considered as a luxury here in Pakistan which the effecting the growth of this sector in the country while it is behaved as one of the basic human rights in foreign countries.

The ministry of IT & Telecommunication demanded from the federal and provincial governments to reduce the taxes on this sector as they are irrationally high. On Monday, the NA’s standing committee on IT & Telecom discussed the issue of taxation on telecom sector with Capt ® M Safdar.

The committee was informed by FBR that in 2015-16, they collected Rs. 2.7 billion Federal Excise Duty and Rs. 43 billion withholding tax from these taxes on the sector while GST by provinces is additional. The committee constituted a subcommittee to propose relaxation in the taxes of IT sector as it is one of the heaviest taxed sectors of country. The committee also decided to take up the issue of high level of GST taxes on the sector with chief ministers of all the provinces.

Representatives of cellular companies said that provinces charges different taxes rate on same services due to which they have to pay these taxes from their pockets. State minister told them that they are developing software through which they can know about the taxes they have to collect from customers while transparency in the system will be ensured by FBR.

The committee was informed by FBR Officials that Federal Govt. collects 14% WHT from telecom sector which is taken from recharge of easy load or scratch card. This withholding tax is deposited on weekly basis in Federal Treasury.

It was told to the committee that several tax issues are pending in Supreme Court including:
·         The department considers Franchise service to the payment of talecom companies, about their fee for management and technical services, to their principal partners abroad.
·         FBR treats the tax on import of machinery by telecos as commercial import.
·         Interconnect payments is considered as the payment made by telecos to foreign operators for using their networks.
The rate of income tax valid for corporate sector is 32% for year 2016, 31% for year 2017 and 30% for year 2018 while these taxes are taken from the annual net income of telecom and other companies.
FBR representative told that custom duty on import plant, machinery and production equipment of mobile phones is exempted in the budget 2015-16. In budget 2016-17, the SIM and Smart Card manufacturers are given several duty incentives.

Before budget 2016-17, SDPI proposed to reduce custom duty on IT and telecom sector to 0-5% from 2-15% to assist telecom operators but it could not be approved due to huge revenue repercussions. FBR is not considering any duty reduction on telecom sector at the moment.





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