Govt doubles sales tax on handsets, introduces internet tax

8 Jun 2015

The government of Pakistan is set to double the sales tax on mobile phones in its new budget for the 2015/2016 fiscal year, Pro Pakistani reports. Under the new policy, the levy will double to PKR300 (USD2.94), PKR500 or PKR1,000 from PKR150, PKR250 or PKR500 respectively, depending on the features of the device. While the tax is a comparatively small fee, the price increase is expected to have an impact on low income users, which make up the lion’s share of Pakistan’s more than 135 million mobile subscribers, potentially stymieing growth in the nascent 3G and 4G sectors. Indeed, more than the tax itself, industry commentators have suggested that the move represents a worrying shift in the government’s approach to the telecoms sector, in light of the recent introduction by the Punjab government of a controversial 19.5% tax on internet services providing a download speed of 2Mbps or more, or that cost upwards of PKR1,500 per month.

In a similar vein, Pakistan’s finance minister, Ishaq Dar, was criticised for wrongly claiming that financing for several broadband and ICT projects had come from the state budget, rather than the Universal Service Fund (USF), which is funded by a 1.5% tax on the annual revenues of telecoms firms. Mr Dar indicated that USF programmes including the construction of tele-centres, the extension of fibre-optic cable networks and deployments in rural and remote areas had been paid for by the federal government.