Telecom companies are facing five major challenges in the taxation regime and some major amendments to tax laws have been suggested to the Federal Board of Revenue (FBR) to remove distortions in tax system for telecom sector in the coming budget (2017-18). Sources told Business Recorder here on Tuesday that the telecom industry has shared these five big taxation challenges with the Senate Standing Committee on Information Technology & Telecommunications.

Taxation challenges faced by telecom industry included very high tax rates and detrimental tax regime for telecom sector as well as consumers, tax harmonization across provinces and federation (rates & criteria), harsh and incorrect tax assessment by the authorities resulting in unnecessary litigation and delay in payment to exchequer, extremely slow and ineffective dispute resolution/rectification, and no investment incentives like industrial undertaking in this investment intensive sector.

To deal with these issues in budget (2017-18), telecom sector has suggested that the FBR may be encouraged to resolve disputes in expeditious and win-win manner. Telecom sector has urged the standing committee for its support to develop positive narrative to enhance investor confidence and encourage FDI.

Telecom companies have approached FBR for simplification, rationalization and consistency of tax rates and policy in the interest of the people of Pakistan and for conducive business environment. Telecom sector has proposed tax incentive for telecom sector to encourage investments similar to industrial undertaking.

The representative of cellular companies gave comprehensive briefing to the committee regarding the cellular industry's socio-economic contribution & taxation issues that are prevalent in the country. He also highlighted contribution of cellular industry to the economy whereby investment injected since 2004-17 is US $15 billion as well as more than 14,000 direct and indirect jobs have been offered to the unemployed educated youngsters.

The telecom representative also highlighted the role of telecom sector in Vision 2025 and key goals in most challenging sectors of Pakistan. He further shared details of revenue being generated by mobile operators as well as its contribution towards national exchequer on account of GST, AIT, custom duties and PTA levies. On the query raised by the chairman committee, he also shared challenges being faced by the mobile operators as well as way forward and suggestions to overcome their issues, the sources added.

Copyright Business Recorder, 2018