ISLAMABAD
The telecom industry believes that proposed changes in taxation of call rates are not possible to be implemented.
Industry sources said that the proposed taxes are not implementable as the charging structure is not linear and is based on bundle offers to facilitate prepaid users which account for 98 percent of overall cellular subscribers in the country.
This regressive move will play havoc with the prepaid bundles being enjoyed by the lowest segment of society as the operators will be constrained to remove such offerings, making voice calling significantly more expensive.
In addition, users will quickly learn to redial before 5 minutes to defeat this proposed levy; hence, it may bring nothing to the government but add to the complexity for the telecom sector and operators while causing massive inconvenience to the citizens.
The overall tax on mobile phone calls lasting more than five minutes will reach 65 percent from July 1 (Thursday) and such calls will cost Rs2.72. There will be 75 paisas more charged on every phone call exceeding five minutes starting July 1.
On an average, 33 paisas are charged on every mobile phone call in Pakistan. Telecom operators receive Rs1.65 on every five-minute call. The government charges 19.5 percent Federal Excise Duty (FED) on these calls. Mobile phone users will now be paying these 75 paisas in addition to the 19.5 percent FED.
According to sources in the telecom industry, the existing call rate of duration above five minutes is Rs1.97, which also included 19.5 percent federal excise duty. However, with the implementation of proposed rates the call above five minutes will cost Rs2.72.
Telecom sector has emerged as a prominent contributor to Pakistan’s economy. Its contribution to the national exchequer increased by 129% in 2020, compared to 2019, despite the Covid-19 pandemic.
The sector contributed Rs278 billion in FY 2020 as compared to Rs121 billion in FY 2019, the Pakistan Telecommunication Authority said in its annual report in January 2021.
The use of data stands at 4,498 Peta Bytes that shows a growth of over 77%, according to the PTA.
The country has international bandwidth connectivity of 3.1 terabytes and around 47,000 cell sites, of which 90% are 4G-enabled sites. Telecom networks are currently available to 87% of the population, according to the PTA. It is working with operators to increase their network coverage for the remaining 13% people of the country.
Local manufacturing of handsets has enlivened the telecom ecosystem, with growth in local 4G device manufacturing crossing 34%, the report said. Pakistan experienced trials of 5G services that were one of the few firsts in South Asia.
