Government Doubles the Custom Duty on Import of Telecom Equipment

Tax-Burden

Government of Pakistan has doubled the custom duty on imported machinery that includes telecom equipment required for rollout of telecom (and particularly the 3G) networks.

According to details mentioned in Federal Budget for 2014 – 15, the import duty on imported machinery is doubled from previous 5% to a 10% value now.

This increase in duty will be applicable from July 1st, 2014.

In addition to increase in custom duty, the Finance Bill 2014-15 also nullified the Statutory Regulatory Order 575(I)/2006, which used to facilitate import of telecom equipment on reduced duties as opposed to the standard customs tariffs.

Under the said SRO, telecom sources say, the telecom industry used to avail a tax rebate and paid mere 5% customs duty on import of selected telecom equipment, which, as proposed in the new budget document, will increase to 10%, 15% and even 25% in some cases.

This has happened at a time when 3G rollouts are on the rise and telecom companies are aggressively working on their 3G network expansion plans.

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Also Read: Government Shocks Telecom Industry with New Taxes on Handsets

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According to stats made available to ProPakistani, telecom industry paid Rs. 670 million (approximately) in customs duties on the telecom equipment imported last year.

Calculations suggest that if a similar quantity of telecom equipment is imported this year then the total custom duties to be paid by operators will increase by 43 percent to reach at or around Rs. 968 million.

This equation, if translated with consumers’ viewpoint, will mean that telecom operators will be able to deploy only half of the network they had planned at the time of 3G auction, because budgets have already been approved and allocated for network expansions by almost all operators and they can’t be revised.

For example, if telcos were to set up six towers in an area, they would now be left with a budget to set up only four.

Not to forget, as per 3G licenses Telecom operators are to meet a certain rollout deadlines to meet license’ requirements. With budgets approved by respective group headquarters, it appears that telecom companies might fall short of the 3G rollout obligations placed by Pakistan Telecommunication Authority.

The industry has already made a big investment for acquiring 3G licences and upgrading their infrastructure, getting the headquarters’ approval for an additional budget would naturally be difficult.

Our sources tell that mobile phone operators have already written a letter to the finance ministry to raise the issue. However, its the government which should have considered the outcomes of further-taxing the telecom industry, which is already one of the highest taxed sector in the country.

This also leaves a question mark on government’s claims of stretching the technology to the people of country. These new taxes will only block the efforts of taking 3G to masses instead of helping them.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK


  • Haris

    Sher aaya Sher aaya!!!

    • mazhar111

      chop kar jao jo karna ha sher karay ga

      • Najam

        Beta: Ami bhook lagi h
        Maa: Beta Metro Bus Kha lo,
        Beta: Ami kapray nahe han pahenay k liey.
        Maa: Beta Metro Train Pehan lo.

        • Ali

          kia bongi mari hai idiot Sale kapre or roti ke laik hi nai ha

          • Najam

            Aja tjy pappi karun :p

  • Muhammad Ashraf

    no worries, telecom operators will do under invoicing for their imports in order to save the duties

    • Hassam Tahir

      It isn’t that simple. Imports at that scale are done through LCs. You can’t under invoice in that.

      • Muhammad Ashraf

        Everything is possible under invoice amount can be paid as advance payment to benificiary from overseas account like dubai etc.

        • Hassam Tahir

          I can specifically talk about ufone, I’ve worked there but all big companies do the same. They don’t pay in advance when importing. Imports are only done through LC’s and you can’t under invoice in LC’s

          • Hassam Tahir

            There is a high risk of importing on advance. LC’s ensure timely payment and delivery of goods. While banks take the risk so that is the preferred method of importing. Besides in today’s world you can find out the price by a simple google search

  • Saeed

    Aik mobile sasta mil raha ta ab woh bhi “sher aya sher” gharibion kay hath main in ko ache nahi lag rahe.

    Kahan gaye PML (N) kay supporter what would you say about this huge increased tax?

  • Guest

    Time to leave Pakistan!

    • Azi

      Come Saudi Arabia.. tax free country

      • Guest

        What is respect of a Pakistani citizen in Saudi Arabia?

        • Muhammad Abrar Naeem

          What is the respect of Pakistani in Pakistan ?

          • SUPER BRAINS

            Yeh Cheez

            • Patriot

              Yeh Chez Mere Aziz

        • Azi

          i believe you get answer from @muhammad arbab naeem

    • kami

      Agree. I m thinking about it. Yar life tho sakoon si hogi na.

      • Muzamil Ismail

        haha if you are not a doctor or engineer or teacher then dont expect anything better for yourselves in any country.

        • kami

          bro i m software eng. that’s why i m talking. I can easily get abt 8 – 10K DHR in UAE. its enough for enjoyment.

          1 Mercedes can be easily avail after 1 year saving. :)

          • Muzamil Ismail

            i stated that … Engineer or with any professional skills.
            It will be your kindness if you tell in what programming languages or which fields of computer science i should focus. I am also doing bscs .. :)

    • Radz

      Go leave Pakistan Bc, we don’t need people like you. Not even 10% people pay taxes here, how can Govt survive? Those Telecom operators earn billions per month, why the f*** they can’t pay 15% additional duty?

      • Fraz

        AGREED.

    • Haider

      exchange nationality with Dr. Tahir Qadri :P

  • Junior

    HOOR CHOOPOO GANNAY!

  • Azi

    Friendly Budget hai yar… lol .. or do in gango ko vote :P

  • jawadahsen

    looto donon hathon se!

  • Guest

    All the time, our government is looking for a way to apply taxes. Let’s see, what will be the next tax!

  • Guest147

    Not only his first budget was so miserable with Increased WH tax on telecom which hurt people badly, and now under the friendly budget umbrella he strikes again.

    Mr Ishaq Dar you’re the most pathetic finance minister we ever seen. Period.

  • Bilal Aahil

    really? i mean really guy? this is BS.

  • Ahmed Habib

    Its very good step, telecom operators should also know that 5-10% maintenance fee on every recharge is illegal as sell before complaining….!

    Quality to kbi behtar ki ni inhon ny ye maintenance charges employees ko umra krany k lye rakhy hain???

    • Rizwan Shakir

      Good… tax increase ka words dekhtay hi Pakistani loog qaboo se baahir ho jatay hain, jab k yeh tou dekhain k yeh Companies kis tarah awam ki “Khidmat” kar rahi hain, har qisam k bey tukkay charges laga laga kar…

    • Hassam Tahir

      These charges will be transferred to us as well

  • imran

    Har jagha awam ke he patt rahe hai
    PML N ko vote deny walo pay lanat.
    Teleco companies or govt awam k marr rahy hai or govt teleco companies pay b marr raha hai

    • Ahmad Khan Sabri

      Tumharay ooper aik hazar bar lanat, Tumhain sharam aani chahiay, apnay mulk ki taraqqi hotay nhi dekh saktay ho. Tum jaisay log mulk kay dushman hain

    • Dr. Aamir Liaquat Hussain

      good bhai or koi chawal marni ho to maar den

  • nice n naughty

    Increasing tax is not a big deal for them but the surety for collection of all taxes instead of issuing the 3G or 4G licenses to all defaulters. Govt could ensure such a big investment if they enforce compulsion of payment of all outstanding dues before getting their 3G or 4G licences. But alas this has been a big cartel in the name of Telecom mafia in pakistan.

  • Sheraz

    Piece of cake for all telecom operators. They have high cash flows and very cash rich.

  • nice n naughty

    Telecom operators are earning alot and they also take care of bureaucrats on top positions out of their kitties to happy them giving relaxation and issuing such letters which give them legal way out to put in hold till final order and at the end there is no telecom policy in the country since last 11 years give them way out without paying taxes, levies. Without policies there is no chance to stop them making money.

  • Hungry Bird

    This is all Telecom mafia everywhere. Dr. Ismail Shah knows everything as he was member telecom for a long time. how can he deny. Collection mechanism is not their issue. These guys just wants tabs, laptops, high end meetings, dinners and foreign tours and ohter gifts and bakhsheesh.