The Telecom Operators Association (ToA) has submitted an extensive set of budget proposals for the upcoming fiscal year 2025-26, advocating for tax relief, policy amendments, and exemption from withholding taxes.
The association argues that the current tax regime, stringent regulations, and financial burdens are stifling the telecom sector’s ability to grow, expand digital infrastructure, and support Pakistan’s economic development.
The telecom industry is grappling with multiple challenges, including high taxation, regulatory bottlenecks, and financial constraints. These issues hinder network expansion, increase operational costs, and limit investment in 5G infrastructure and digital transformation.
Challenges Faced by the Telecom Industry
ToA strongly opposes the amendment in Section 147 of the Income Tax Ordinance, 2001, which grants tax authorities the power to reject advance tax estimates filed by telecom companies. The association asserts that this amendment creates uncertainty, encourages litigation, and disrupts business operations.
Recent changes to the Alternate Dispute Resolution Committee (ADRC) framework have made ADRC decisions binding on both taxpayers and authorities. ToA believes that this amendment is unfair and limits the scope of appeals and legal recourse.
The telecom industry faces excessive withholding tax deductions on various transactions, including imports, services, utility bills, and corporate sales. ToA urges the government to grant exemption from all withholding tax provisions under the Income Tax Ordinance, similar to the banking and oil sectors.
ToA proposes sector-specific tax reforms, including inflation-adjusted tax brackets and lower withholding tax rates, to support telecom employees and ensure a steady supply of skilled workforce essential for digital infrastructure growth.
Extension of Minimum Tax Carry-Forward Period
ToA argues that these excessive taxes inflate service costs, making telecom services less affordable for consumers and slowing digital adoption. The association recommends reducing these taxes to stimulate market growth and encourage investment in the telecom sector.
Telecom operators rely on lithium-ion and rechargeable batteries for network operations, particularly in 5G rollout and infrastructure maintenance. ToA urges the government to remove the 5% regulatory duty on these essential imports, emphasizing that they are not locally manufactured and are critical for uninterrupted service provision.
ToA has called for lowering the 9% regulatory duty on telecom infrastructure equipment, including RAN, Core, and transmission devices essential for 5G deployment. Reducing import costs will accelerate network expansion, improve service quality, and encourage investment in digital infrastructure.
