Pakistan’s telecom industry has called for broad tax relief measures in the upcoming federal budget, arguing lower taxes and duties are essential to accelerate investment in digital infrastructure, support 5G deployment and expand access to digital services nationwide.
The telecom sector, a key driver of Pakistan’s digital economy, says it has contributed more than Rs. 2.5 trillion in taxes and levies to the national exchequer over the past decade, while continuing to operate under one of the region’s heaviest tax regimes. In a statement, industry stakeholders lamented the sector currently faces multiple layers of taxation, including a 19.5% General Sales Tax on telecom services; 15% advance income tax on mobile services; 6% withholding tax; 2.5% regulatory duty; 29% corporate income tax; and 10% super tax on profits.
Telecom operators are also subject to taxes and import duties ranging from 15-20% on telecom equipment, a 15% tax on dividend payouts and duties and tariffs of up to 67% on the import of optic fiber cable. According to industry estimates, mobile users currently bear a cumulative tax burden of nearly 37% on prepaid services.
Ahead of the budget, telecom companies have proposed a series of fiscal reforms aimed at improving affordability, encouraging investment and advancing Pakistan’s digital transformation agenda.
Among the key proposals is a reduction in withholding tax under Section 153 from 6% to 4% and an extension in the carry-forward period of turnover tax under Section 113 from two years to five years. The industry says the measures would improve cash flows, support early deployment of 5G networks and ultimately increase tax collection through higher economic activity.
Operators have also sought a complete exemption from customs duties on imported 5G equipment. Industry estimates suggest the removal of these duties could generate approximately Rs. 12 billion in additional capital expenditure, accelerating network upgrades and expanding 5G coverage.
The sector has further proposed reducing advance income tax on mobile services under Section 236 from 15% to 8%. Telecom companies argue that lower taxes would make services more affordable, increase mobile penetration and support greater digital adoption across the country.
Another major proposal calls for reducing duties and taxes on optic fiber cable imports from 67% to 5%. Industry stakeholders say the move would lower network deployment costs, speed up fiber rollout and improve broadband quality and coverage nationwide.
Telecom operators have also urged the government to introduce administrative tax reforms, including revoking the commissioner’s authority to reject advance tax estimates filed under Section 147 of the Income Tax Ordinance. They argue the measure would improve the ease of doing business by reducing disputes, lowering compliance costs and providing greater certainty to taxpayers.
Separately, the Global System for Mobile Communications Association (GSMA) has called on the government to adopt a more balanced and predictable fiscal framework in upcoming budget to support long-term digital growth.
The global mobile industry association has recommended rationalization of telecom-specific taxes, improved affordability of mobile services and devices, simplification of the taxation framework, reduction of distortionary taxes affecting capital allocation and policies that encourage network expansion and digital inclusion.
While acknowledging recent reforms in spectrum pricing and auction mechanisms, the GSMA said spectrum-related measures alone would not be sufficient to achieve Pakistan’s digital ambitions without broader fiscal reforms.
Industry stakeholders maintain that telecom should be viewed not only as a source of government revenue but also as a strategic sector capable of driving economic growth, innovation and digital inclusion. According to the industry, a more investment-friendly tax environment would accelerate 5G and fiber deployment, improve access to digital services, expand financial inclusion and strengthen Pakistan’s digital economy. Stakeholders argue that such reforms would create a long-term cycle of investment, innovation and higher tax revenues generated through broader economic growth.
As Pakistan moves toward next-generation digital infrastructure, industry representatives and international stakeholders say balanced fiscal reforms will be critical to unlocking the country’s digital and economic potential.