FBR opposes tax break for telecom sector

* Telecom sector is paying 12.5% in advance income tax and 17% in federal excise duty on telecom services

ISLAMABAD: Federal Board of Revenue (FBR) has opposed any reduction in taxes including abolishing advance income tax to boost the telecom sector.

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 had also proposed the economic coordination committee to scrap 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 Rs 250.

During the 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 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.

In its comments on the proposed tax relief for the telecom sector, the Federal Board of Revenue had opposed it.

Sources told newztoday.com that FBR had opposed tax relief for the telecom sector as it feared that any reduction in taxes would deprive the country of billions of rupees revenue.

The stance of FBR would also be submitted to the economic coordination committee for the decision. Sources said that there were fewer chances that ECC would approve tax relief following opposition to FBR.

The IT ministry pointed out ECC earlier 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.

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