Mobile phone companies, federal and provincial government lost an accumulated amount of over Rs. 103 billion during the past 10 months when taxes and service charges on mobile loads remained suspended, ProPakistani has checked with experts.
The Supreme Court of Pakistan had issued a verdict on June 12, 2018, to suspend all taxes and services charges on mobile phone top-ups.
Initially, the decision said that suspension of taxes would be for 15 days but the taxes were never re-instated until just yesterday when Supreme Court issued a fresh order to reinstate the taxes and service charges.
For those who don’t know, the Supreme Court had earlier admitted that WHT (withholding tax) is unfairly charged from every mobile phone user, that is, not every mobile phone user falls under tax net but WHT was charged equally from all mobile phone users, regardless of their income brackets.
Supreme Court had then ordered FBR and telcos to devise a plan to deduct WHT tax only from those mobile phone users whose income is more than the taxable amounts.
No one, however, reached a mechanism to properly identify mobile phone users and their income brackets and the case only lingered for over 10 months.
Below are the taxes and service charges that were deducted on card loads for mobile phone users:
- At the time of load:
- Withholding tax: 12.5%
- Service Charges from telecom companies: 8-10%
- Taxes on each call
- GST: 17% in the capital/19.5% in provinces
Losses in Billions
Due to the Supreme Court’s decision, while taxes and service charges on mobile loads remained suspended, mobile phone companies, federal and provincial governments incurred losses in billions.
Experts calculated the amounts based on 2018’s revenue of mobile phone companies and claimed that losses could amount to around or over Rs. 103 billion in total.
Total Duration of Tax Suspension:
- From: Wednesday, 13 June 2018 (Inclusive of Wednesday)
- To: Thursday, 25 April 2019 (Inclusive of Thursday)
- Total Duration: 317 days or 10 months & 13 days
Assuming that mobile phone companies made Rs. 328 billion during the period (based on the fact that telcos made Rs. 382 billion during the FY 2017-18, source: PTA).
Losses During the Period:
- Telecom Operators Losses (8-10% service charge): PKR 29.56 Billion
- Federal Government (12.5% WHT): PKR 31.7 Billion
- Provincial Governments (19.5% GST): PKR: 41.97 Billion
Not to mention, the dispute was only for WHT (withholding taxes) that’s collected by Federal Government, however, former Chief Justice Saqib Nisar deemed it more appropriate to suspend all taxes — which, in turn, hampered the revenues of mobile phone companies and provincial governments as well.
Government can take. But why Telecos? Are they providing free of cost services that they have to implement their own deductions?
It’s like thieves losing stolen money and crying for it.
This article is incorrect regarding Telcos
Telcos were actually enjoying no taxes as people were able to make more calls/sms thereby increasing telcos’ profits. Only the provincial and federal government took a hit in revenue collection.
Hi,
It is the matter of input / output tax. Telcos were unable to collect input tax in sufficient volume right after ban to collect WH Tax from customers which leads to have less tax claims from FBR on already paid output taxes in different heads i.e import/duties/services etc.
moreover, they increased packages rates. For example, before ex chief decision the monthly package was for 380 (Jazz) so one had to have spend 500 on load to 380 balance and get the package but as soon as the chief justice exempted tax.. they changed the price from 380 to 500 and thus people got zero relief govt went in losses but telecom operators looted with both hands and most astonishingly nobody was there to stop them.. nobody even felt this…
No one is talking or reporting about this issue.
Super cards, monthly internet packages, broadband device packages, there prices remained same even when the tax was exempted and now when tax is restored, these companies have increased the prices of the packages.
e.g
Zong MBB 36GB was Rs 1500 before exemption
Its charges remained same after tax exempted
Now same package can be activated for Rs 2000
Who’s gonna pay for those absurd amount of salaries and perks :)
How are telecom companies hit by it? It’s a “government’s” tax not something implemented by those companies. Poor logic and poor journalism.
Lower prices = higher demand = more sales = higher profit.
It should be bifurcate by TAX listed and Not TAX Listed People :
Mostly user belong to Lower & Middle Class :
We are illegible to pay 40 Rupee on 100 Wala Cads
Why not make the taxes and maintenance charges double and then you can say they lost 206 Billion.
..KIYA BAKWASS HA /….SUB THIEVES HAN….
Are you being paid by the telcos? What’s the point in looting the poeple with so called service charges (and that too with so hefty percentage) by the telcos. And Government should devise a policy for WHT for case to case basis.
In a free market economy businesses are free to set the prices they like. If you don’t like it launch your own telecoms business and offer services at lower prices.
Chief Justice must resign. He is unable to make a decision based on our basic rights… He should had atleast removed the WHT and Service charges in the final decision…
Jab ap jesay ya shyd ap bi choron dako k sath sarkon per nikal ker long march ker saktay ho chahay kisi ki b hakomat ho per apne haq k liye ghar bethay comments ker dene k wo resign ker de ye kahan ka insaf hay
Hum log apke sakon k liye dushmano k sath har jaga lar rahay hain kia ap log apne haq k liye uth nahi saktay ya ye bi kaam hum log aa ker karain
telcos ko loss kab hoa hai ??
When the SC is confused, the nation will be clueless. Still expecting CJP to take down the PMLN and PPP Mafias…otherwise all will be lost.
Yar ye Imran jahil ne kia haraam ke taxes lagaye we hain. Aur woh DSL pe 19.5pc GST and 12.5pc WHT kia haram ka tax lagaya wa hai pervert womanizer playboy ne. is third class democracy se toh woh dictator musharaf he acha tha uske door mein toh 60 ka dollar tha. Military equipment be saste mein milta.
Tm sb py lanat beshumar
Losses to the Government? Losses to the Telcos? I beg to differ.
I would be very happy if the Telcos gave a certificate for all the deductions that they make on each call, etc. This will ensure that people will be able to claim this in their tax returns as ‘Tax Paid’ to avoid double taxation.
Where the Government can get money, they are afraid to touch as this will mean taking on the fat cats.
I would also propose to make all Bribes to attract Sales tax and advance tax on the recipient. This way he makes this grey money (not nearly white!)
Sounds pretty stupid, cynical and harebrained… no?!
Its the same feeling that a citizen gets when he is screwed up with taxes on all what they do, without getting any documentation for this. And sees all the enormously rich people get away with murder (sometimes literally).
Two more points:
1. Telcos never gave the tax money to FBR, according to itself, when they were taxing people.
That’s how telcos showed enormous profits then after sagging performance for more than 3 years before.
2. How about the local phone manufacturing thieves who get all the tax breaks but sell at the same market price since they don’t use Made in Pakistan labels?
Welcome to Naya Pakistan…more corrupt and confused than Purana one !
Government wants to keep the country backward by taxing things that improve worker productivity like access to modern communications technology. They don’t want to grow the economy. They want to keep it stunted.
To jb ye itna tax jama hota tha tb kidr jata tha.
10 month ka 103 bilion rupee.
Kis pr use hota tha?
New cheif justice is biggest gadha.
First of all, the rates of call/internet/sms packages were increased right after the removal of taxes. I know Jazz’s monthly prepaid package which required Rs 380 (actually required Rs 500 load) was increased to Rs 500. This package currently costs Rs 520. So in my opinion, telcos must have gained a lot with these bundles. Also, this was a prosperous period for the public and the overall purchases were most likely increased due to relaxation in taxes. So this article puts telcos in the list of victims but they are clearly not victims.
At this point of time when the regulator in process of trails of 5G and related infrastructure by the licensees for services. The QOS deteriorated with peak time tariffs enhanced. Operators/licensees seek conducive environment to invest in 5G license/infrastructure capacity building. They should be motivated to invest in 5G, as they look forward for a good case for other markets to tap. Average ARPU is much lower, resulting all licensee operators closed their customer Service Centers. Only franchisee shops are providing support in Pakistan. The regulator should take notice there is no customer support. Just Sim lagao, or Bhago.
ZAMA DA HUTA YE BAILAAA..PO MOR AW PO HOOR DO IMRAN KHAN AW DO HUKOMAT WALA WOHEJAM..AI KO ZANTALAQ BACHO..RASHAI CHE PO KONO KE DARLA SAMSAI DARDANA KAM..DO ZANTALAQ BACHO..
Telcos k 10% ghatya tareen chawal hai
Saaly Packages b laga k Charges kis cheez k lety hain
Zong walay boht zaleel hen 200 wala package 270 mein kren gay….likha 200 hoga
*Other than GST, rest of the taxes are unjust, specially service/admin charges, call connect charges by operators.
**Jazz is openly known to usually retain deducted tax in banks on purpose and delay deposit it to govt.
If Telco’s considering TAX amount as decrease in revenue, this is what they include in their pocket which is not belongs to them.