The Global System for Mobile Communications (GSMA) has conveyed serious concerns to the Finance Minister, Shaukat Tarin, over the introduction of a new levy of Rs. 0.75 per voice call exceeding 5 minutes. GSMA stated that this measure would increase the compliance cost for the government and mobile sector, besides creating uncertainty for the sector planning investment as part of the planned spectrum auction.

GSMA Head of Asia Pacific, Julian Gorman, wrote a letter to the Finance Minister on federal budget 2021-2022 and recommended the removal of the new levy of Rs 0.75 per voice call exceeding 5 minutes.

The GSMA Head stated that over the last years, the government of Pakistan and the mobile sector has engaged in a dialogue to rethink mobile sector taxation to boost Pakistan’s transition to a digital economy.

The GSMA commends the Government of Pakistan for adopting the tax reform measures approved by the Federal Cabinet. We trust that these will support the adoption and usage of mobile connectivity by citizens and businesses and will improve the business environment in Pakistan.

The telecommunication sector is a key enabler for social and economic growth, and these tax reforms will contribute to spread these benefits more widely within society.

“However, we wish to express our concerns regarding the introduction of a new levy of Rs. 0.75 per voice call exceeding 5 minutes, as per the speech of the Honorable Finance Minister in the Senate of Pakistan on 25th June 2021 and later approved by the National Assembly as part of Finance Bill for 2021-22,” he added.

The letter further stated that the late introduction of such a levy would negate the aforementioned tax reforms by raising the cost of mobile services, in particular for low-income households. From an operational perspective, the new levy will significantly increase the compliance cost for the government and the mobile sector due to the challenge of implementing such a tax. In addition, the new levy would create an additional barrier and slow the progress to close the usage gap.

Furthermore, due to its negative impact on demand and perspective of development for the mobile sector, this new levy creates uncertainty while the mobile sector is planning long-term investment as part of planned spectrum auction, presenting a significant risk for the government achieving the Digital Pakistan Vision. “We invite the Government of Pakistan to consider the removal of this levy. The GSMA remains available to engage further,” he added.