Thanks to Taxes, Telecom Revenues & Tax Contributions Decline During 2014-15

Despite new revenue stream in shape of mobile broadband with millions of new paying customers for 3G and 4G services, cellular mobile phone companies generated a total of Rs. 317.02 billion in revenues during 2014-15, down from Rs. 322.68 billion last year.

Recently shared financial stats of telecom sector from Pakistan Telecommunication Authority hints towards the entire telecom sector under performing during the year, mainly due to massive taxes and undue burden from the government under the head of duties, custom charges, withholding taxes and sales taxes.

Figures show that government’s goals and desire for generating more revenues from telecom sector by taxing it excessively back-fired because telecom sector’s contribution towards national exchequer declined massively during the reported period.

Telecom sector contributed Rs. 45.8 billion under the head of GST, 25% down from the figure of Rs. 60.1 billion a year ago.

WHT, custom duties and other tax collections also dropped from Rs. 78.6 billion during 2013-14 to Rs. 73.5 billion during 2014-15, demonstrating a 7 percent decline despite the growing demand of gadgets, mobile internet and other accessories after introduction of 3G and 4G technologies in the country.

Total contribution of telecom sector towards national exchequer stood at Rs. 126.3 billion during 2014-15. Last year, this contribution was about 243.3 billion which included Rs. 104.6 billion under the head of 3G/4G license fee of various operators.

Downward trend in revenues was also witnessed for local loop, LDI and wireless local loop segments.

This  trend will only persist in coming years as more taxes were added this year and are feared to have a negative impact on already declining revenues of telecom sector.

Just to recall, 14% withholding tax on internet in entire Pakistan, 19.5% GST on internet, 8% minimum tax on service companies, and double custom duties on smartphones and feature phones were introduced during this year’s budget in July 2015.

Experts say that these stats are clear indication of how government has not only failed the telecom sector but itself as well. “These figures have a lesson for government, that it must learn if it wants the telecom sector and national economy to grow”, they said.

You can see more in the below infographic, which will give you an idea of how Telecom sector has performed during the years, despite new addition in subscribers, services (namely the 3G and 4G) and coverage.

PTA_Financials

 

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


  • Lol this was surely going to happen.
    Government is getting too greedy. Its acting like a leech which wants to drain every drop of blood out of us! And this decline clearly shows that the “blood” is starting to run out.

  • The selfish and stupid government that we have. We’ll always be years behind our neighbors and other developing countries, thanks to these lunatics #GoNawazGo

  • What else you’d expect. As long as their businesses (metros and roads) is growing they don’t give a sh!t about rest of country and businesses. And those increments in taxes are caused by development of unnecessary projects they are running.

  • There are many ways to collect money, but I don’t know the government has only one option to earn money – taxing! I have some thoughts to increase the Khazana of the government.

    1. The more the SIMs, the more tax will be collected.
    2. The telecom companies have less revenue, so the less tax is being collected; but, if the implemented tax is not as much then more revenue will be generated, of course, the more the tax.

    I presume there are many more!

    • I thought there were only three ways for a government to earn money: Taxes, Foreign Loans, and through your local industry.

  • nawaz shareef is good PM. and Ishaq Dar is expert.
    120Million rupees per year is huge profit.
    i hope they must realize that huge profits benefited companies not consumers so PMLN taxed them.
    proud of being Lion.

  • aamir sahab aap ki post aur hassan nisaar ke Tujziey aik jaisay hotay hian, HUM MAR GAI LUT GAI, BURBAAD HOGA. …………HUMEIN LOOT KAR KHA GAI.

  • Oh khuda ke bunday agar itna in company par zawal agia hai to yeh 40 channels par hur 5 minutes ke baad Ads kion daitay hain. Itna zawal hai to company bund karien aur apnay apnay mulk chalay jain.

    • یہ سب دیکھنے کے لئے پی ٹی آئی کی متصب عینک لگائیں …. آپ کو بھی وہ سب نظرآ جائے گا جو ان کیڑا کاروں کو نظر آتا ہے

  • جناب کیرا کار صاحب اس پیج کا نام تبدیل کر کے PROPTI رکھ لو اور تم کوفوری طور پر KPK چلے جانا چاہے ہر وقت پی ٹی آئی اور موبائل کمپنیوں کا نمک حلال کرتے رهتے ہو …. عمران کا ایمان ہے موجودہ حکومت نے اب تک کوئی اچھا کام نہیں کیا اور پچھلی حکومت سے بری ہے دل پر ہاتھ رکھ کر کوئی سچ بولو تعصب کی عینک اتارو تو کوئی اچھا کام نظر آے

  • Haha yea just wait and see when most people switch to voip, revenue generated from taxes will decrease further!

  • Sachaii ko parh kar itnii aag kyu lag jatii haiii ??? its not about PTI or PML Noora, its about our pakistan and its stability .. Azaadii e raaey ka haq haii t0 sab ko ragarna shuru kr deta hai har koii lakin STATISTICS dekhnay kii tofeeq kisi ko nahi hotii :/

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