The telecom sector in Pakistan has formally submitted its tax-related budget proposals for the fiscal year 2025, calling for a reduction in Withholding Tax (WHT) on subscribers and a nationwide harmonization of General Sales Tax (GST) at a lower rate of 16 percent. Currently, the sector faces a cumulative tax burden of 34.5 percent—comprising 15 percent WHT on subscribers and 19.5 percent GST on services. Sector stakeholders argue that this level of taxation is detrimental to both consumers and operators, and they propose a gradual reduction of WHT from 15 percent to 10 percent, ultimately seeking its complete elimination.
The proposals urge policymakers to align the GST rate for telecom services across all provinces and Islamabad Capital Territory. In addition to uniform GST, the industry has recommended reinstating advance tax provisions from the Finance Act 2021 to help improve the purchasing power of customers, most of whom fall below the taxable income threshold.
Industry representatives highlighted the operational strain caused by WHT obligations. Cellular Mobile Operators are required to deduct or collect income tax on a large volume of transactions, including electricity bills for thousands of cell sites. This process increases compliance costs and administrative workload. Moreover, verifying these tax deductions is often not feasible, resulting in unnecessary procedural burdens.
The sector is also pushing for a shift in how WHT is treated under Section 153. Currently applied as a minimum tax, the industry proposes this be made adjustable instead. The present approach, they argue, effectively transforms a direct tax into an indirect one, since the tax liability is detached from actual income, applying regardless of profitability. The telecom sector has emphasized that this contradicts standard tax principles and is especially punitive during loss-making years.
Another significant demand includes increasing the carry-forward period for minimum tax credit under Section 113 from three years to five years, restoring it to the position prior to the Finance Act 2024. Given that the telecom sector’s return on investment typically spans 8 to 10 years, the current limitation is seen as unsustainable, particularly for operators still operating below profitability thresholds.
Additionally, the sector has requested the removal of regulatory duty on telecom power equipment not manufactured locally and proposed excluding telecom services from the retail price list, since they do not import goods for direct consumer sales.
Aamir Ibrahim, CEO of Jazz and Chairman of Telecom Operators Association, has strongly emphasized the negative implications of excessive taxation. He stated that over-taxation not only reduces affordability for end users but also discourages investment in the sector. According to him, Pakistan’s tax system disproportionately targets a small base of compliant taxpayers and industries, and he stressed the need to widen the tax net instead of overburdening existing contributors. He reiterated that telecom should be treated as an essential utility rather than a luxury, and fiscal policy must reflect its critical role as the digital infrastructure supporting all other sectors.
