The Global System for Mobile Communications Association (GSMA) has renewed its calls on the Pakistani government to reduce taxes on telecom services and rationalise import duties on mobile devices and infrastructure, warning that the country’s high-tax environment is actively suppressing mobile internet adoption, discouraging investment, and putting Pakistan at risk of falling behind regional peers in its digital development trajectory. GSMA has warned that Pakistan, despite having talent, ambition, and a vision for Digital Pakistan, risks falling behind regional peers unless urgent reforms are introduced in telecom policy, with the country’s telecom sector suffering from excessive taxation, limited spectrum availability, and a lack of long-term policy direction.
According to GSMA’s analysis, the mobile sector in Pakistan paid approximately 42 percent of its revenue in taxes and fees, with 18 percent of that stemming from sector-specific charges that apply only to the mobile industry, a burden significantly higher than the South and Central Asia average of 26 percent and surpassing tax levels seen in comparable markets across other regions. The consequences of this tax structure are visible in Pakistan’s mobile internet usage statistics. Despite 4G coverage reaching around 84 percent of the population over the past decade, mobile service adoption remains low, with a 59 percent usage gap that is the second highest in South Asia, and only 24 percent of Pakistan’s unique subscribers actually using mobile internet, leaving a large portion of the population disconnected despite having access to coverage. GSMA has consistently argued that this gap between coverage and actual usage is not a technology problem but a cost and affordability problem driven in large part by the tax burden passed on to end consumers.
In its recommendations, GSMA has called for reducing the heavy sector-specific taxes on mobile usage and rationalising duties on devices and services to lower consumer prices and stimulate demand, alongside targeted fiscal incentives such as tax credits for infrastructure investment and research and development to attract private sector capital and spur innovation across the digital ecosystem. The organisation has also called for spectrum reform, recommending that pricing strategies balance government revenue needs with affordability and network expansion, that additional mid-band frequencies be released, and that spectrum sharing and trading be permitted so operators can use available bandwidth more efficiently. Julian Gorman, Head of Asia Pacific at GSMA, noted that reforming telecom taxation was achievable even under the constraints of an International Monetary Fund programme, citing Argentina as a country that had managed to do so, and warned that if urgent reforms were not enacted, investors would shift to other markets and freelancers, a vital segment of Pakistan’s workforce, could not thrive without reliable internet access.
The GSMA’s position aligns with growing calls from within Pakistan’s own telecom industry ahead of the federal budget for fiscal year 2026-27. Pakistan’s telecom industry has submitted proposals to the government recommending a reduction in withholding tax under Section 153 from 6 percent to 4 percent, a cut in advance income tax on telecom services under Section 236 from 15 percent to 8 percent, the abolition of customs duties on 5G and fixed-line telecom equipment, and a reduction in fibre optic cable import duties from 67 percent to 5 percent, with the sector citing studies that a 10 percent increase in broadband penetration can raise a country’s gross domestic product per capita by approximately 2 percent. The government is actively considering significant tax relief measures for the telecom and broadband sector in the upcoming budget, including a major reduction in import duties on fibre optic cable and a possible cut in taxes on internet services, with a senior official familiar with the discussions confirming that the government recognises affordable broadband and strong digital infrastructure as essential for economic growth and future competitiveness.
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