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


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

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

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

        • 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

          • 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

  • 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?

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

  • 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.

  • 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???

    • 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…

  • 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

    • 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

  • 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.

  • 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.

  • 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.

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