Telecom sector under pressure due to excessive taxes

ISLAMABAD: Pakistan Economy Watch (PEW) on Sunday said once vibrant telecom industry of Pakistan is dying a slow death due to excessive burden of taxes.

Telecom sector has undergone a sharp downturn over the past year, with revenue from mobile falling by 1.8 percent and a dramatic drop in direct foreign investment, it said. DFI plummeted by 72 percent to $121 million for the fiscal year ending June 30th, while the telecoms industry contributed 50 percent less in taxes compared to the previous year which were Rs126 billion, down from Rs243 billion, said Dr. Murtaza Mughal, President PEW.

He said that biometric subscriber verification that resulted in overall connection numbers dropping by 18 percent. At the end of the fiscal year, a total of 114.7 million subscribers remained down from 140 million in FY14. Dr. Murtaza Mughal said that Sales tax on numerous types of imported mobile devices has been doubled this year by the government which will is having a negative impact. He said that cell phones and mobile Internet is important tool to reduce poverty therefore policymakers should consider providing relief to telecom industry reeling under heavy taxation. A great number of Pakistan people are unbanked that could be reached and provided financial services if the telecom and internet taxes are reduced as the services of microfinance sector leaves much to be desired.


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