Economic managers of the country have suggested that tax relief model of Bangladesh should be followed in a bid to promote the telecom sector and turn it into an export-focused industry.
Sources told The Express Tribune that in a recent meeting of the Economic Coordination Committee (ECC), economic policymakers pointed out that Bangladesh had offered tax relief to its telecom sector and as a result, the country had not only started manufacturing smartphones but were also exporting them.
Similar tax concessions should also be doled out in Pakistan for the promotion of telecom sector, they added.
At present, the telecom sector is paying 12.5% in advance income tax and 17% in federal excise duty on telecom services. The IT ministry has proposed that economic policymakers should abolish the advance income tax and cut excise duty to 16%.
The IT ministry has also proposed the scrapping of regulatory duty on the import of telecom equipment. It suggests that additional customs duty on raw material may be brought down from the existing 20% and 7% to 5% and 3%. The ministry has also called for withdrawing the SIM issuance tax of Rs250.
During discussion, the minister for industries and production stated that the proposals of IT ministry should be deliberated further, therefore some time may be given to the industries ministry for coming up with its viewpoint.
It was noted that the Federal Board of Revenue (FBR) did not respond to the proposed tax relief despite repeated reminders by the IT ministry. It was suggested that the FBR's viewpoint may be obtained for making an informed decision.
The IT ministry pointed out that the prime minister had constituted an inter-ministerial committee to deliberate on the matter of tax relief for the telecom sector in view of the increasing adoption of online education and health services in recent months.
As directed in a meeting held on July 28, 2020, recommendations including tax concessions for the telecom sector were made. These proposals were shared with the FBR and Ministry of Finance for consultation, as required under the Rules of Business 1973.
The meeting was told that three telecom companies had informed about their contribution to the Corporate Social Responsibility (CSR) programme in view of Covid-19.
They also mentioned that the telecom sector was the only area that had not been provided any relief during Covid-19 by the government compared to other sectors of the economy.
The IT ministry pointed out that such proposals had also been made by the prime minister's task force on IT and telecom.
It was expected that consideration of the proposals would contribute to the expansion and improvement of telecom services in Pakistan and more avenues of investment and employment would emerge during the Covid-19 pandemic. Besides, they would facilitate the government's vision of a digital economy.
The IT ministry submitted the proposals for the ECC's consideration. The ECC reviewed a summary, dated August 21, 2020 about tax issues and directed the industries ministry as well as the Revenue Division to examine the proposals.
Published in The Express Tribune, September 12th, 2020.
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