37% tax on mobile services in Pakistan hinders development, proposal to reduce it

Frontier Economics, a global economic research organization, has released an important report in which it has been stated that Pakistan is among the countries that collect the highest taxes on mobile services and these heavy taxes are becoming the biggest obstacle in the way of the country’s digital development.

The organization has suggested that the total 37 percent sales and turnover tax on mobile services should be reduced to 17 percent. The detailed recommendations are as follows:

• The 15 percent advance income tax collected from consumers should be completely abolished
• The 19.5 percent general sales tax should be reduced to 16 percent
• The 2.5 percent regulatory duty should be reduced to 1 percent

The report said that in addition, 29 percent corporate tax and 10 percent super tax are also imposed on mobile companies, which makes them much more taxed than any other sector.

Frontier Economics says that after these reforms, the revenue of mobile operators can increase by 6.4 percent and the number of users will also increase. The most interesting thing is that just one percent increase in mobile usage can increase GDP growth by 0.115 percent and these reforms can increase GDP growth from 4.2 percent to 4.5 percent.