Pakistan is considering raising taxes on mobile and landline usage as part of its commitments to the International Monetary Fund (IMF), aiming to secure Rs200 billion in additional revenue by early next year. The potential tax measures, which could include higher withholding rates on telephone calls and landline connections, are designed to offset any shortfall in budgetary surplus targets and maintain alignment with IMF requirements for fiscal discipline.
Under the proposed plan, the government may increase the withholding tax on landline phones from 10 percent to 12.5 percent. This adjustment, if approved, would raise the tax burden on households using landline services and could generate approximately Rs20 billion annually. At present, the government collects around Rs10 billion each month from subscribers whose telephone bills exceed Rs1,000. While the landline sector in Pakistan has seen a steady decline in users due to the shift toward mobile networks, the move would still impact a segment of corporate and household consumers who rely on fixed-line connections.
A more significant measure under consideration involves an increase in withholding tax on cellular calls, which may rise from 15 percent to 17.5 percent. The adjustment is expected to yield an additional Rs24 billion annually for the Federal Board of Revenue (FBR). Telecom operators anticipate that the higher tax rates may translate into higher consumer costs, as the burden typically passes on to subscribers through call and data package adjustments. The proposed increase comes at a time when Pakistan’s mobile user base continues to expand, with more than 195 million cellular subscribers and rising data consumption. The new tax measures would therefore affect a large portion of the population, particularly prepaid users who make up the majority of mobile customers in the country.
Officials involved in the discussions stated that the proposed taxes are part of a contingency framework that will be implemented if revenue performance falls below target or expenditure exceeds agreed limits. The decision aligns with Pakistan’s effort to maintain compliance with IMF program conditions, which include achieving a primary budget surplus target equivalent to 1.6 percent of GDP. However, critics within the industry have expressed concern that repeated tax hikes on telecom services could slow digital adoption and increase the cost of connectivity, undermining the government’s stated goals for digital inclusion and broader internet access.
The planned increases are also expected to influence consumer spending patterns. Many users are likely to adjust their call behavior or switch to internet-based communication platforms to minimize cost impacts. Telecom sector representatives have cautioned that such tax measures, while effective for short-term revenue generation, may affect overall usage levels and limit investment in network upgrades. As discussions with the IMF continue, the final structure and timeline of the proposed telecom-related tax changes remain subject to approval by the government and FBR.
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