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:
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:
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:
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.
