Govt considering to reduce Advance Income Tax (AIT) on telecom users from 15% to 10%

Govt considering to reduce Advance Income Tax (AIT) on telecom users from 15% to 10%

Govt is considering to reduce Advance Income Tax on telecom users from 15% to 10%.Sources said that Federal Minister for Finance and Revenue held a meeting with a delegation of the telecom sector comprising of CEO-Jazz, Aamir Ibrahim, and CEO Telenor Pakistan Irfan Wahab Khan, at Finance Division.

In addition the Telecom sector asked the minister to address its issues with regard to advance income tax, imposition of duties on imported phones and review the Cash Margin Requirements (CMR) on mobile phones.The sector asked the government to reduce AIT on telecom users from 15% to 8% as Pakistan is considered one of the highest taxed telecom markets in the world.

It is pertinent to note that AIT was reduced from 12.5% to 10% in fiscal year 2020-21, with a commitment to reduce it to 8% vide Finance Act 2021. However, the move was withdrawn merely six months later, without giving due consideration to its long-term ramifications. Through the Finance (Supplementary) Act 2022, the AIT rate has been increased from 10% to 15%.Sources said that the delegation also asked the government to review duties on imported phones.

The luxury imported phones such as Samsung, Iphone should have duties but the levy on other mobile phones needs to be reviewed. Similarly, the telecom delegation also asked the finance minister to review the Cash Margin Requirements (CMR) from 100% to 10% in next year budget on import of mobile phones. It is pertinent to mention here that SBP in April this year imposed 100 percent Cash Margin Requirements (CMR) on the import of 177 items with immediate effect in order to curtail the unabated imports bill.

Released issued by Finance ministry states that the telecom delegation briefed the Finance Minister on the contribution of IT sector in the economic development of Pakistan. The Finance Minister acknowledged the role of IT and Telecommunication in overall economic development of the country. Moreover, the Finance Minister assured the delegation of all possible support regarding taxation issues a

VIA/PT