Cellular operators urge Sindh, KP govts to remove GST on Internet

KARACHI: Mobile phone operators demanded of the provincial governments to wave off General Sales Tax (GST) on Internet and data services that could immensely cease the penetration of 3G and 4G technologies throughout the provinces.
Tax on mobile Internet is rare in the world as besides Pakistan only Bhutan levied tax but its rate was mere 5 percent.All mobile phone companies working in Pakistan, as an industry have written a joint letter separately to Chief Minister Sindh Syed Qaim Ali Shah and Chief Minister Khyber Pakhtunkhwa Pervaiz Khattak. According to the letter it is mentioned that Sindh government is the first to impose tax on Internet in 2013-14, that is 19.5 percent GST on Rs1500 Internet connection or above 2mbps. Technically, the tax was imposed on Internet service providers though it automatically imposed on cellular operators 3G/4G technologies when it comes to condition of tax on the above 2Mbps. Majority of 3G/4G packages are of above 2 Mbps hence a person who uses Rs500 package will have to pay GST.
Cellular operators, in the letters, tried to explain the provincial governments of Sindh and KP how investments on the rollout of 3G/4G network will be affected in the future if taxes are not removed on Internet.
They added that cellular operators have invested $10 billion over the period of past one decade but they have planed further to enhance their investments up to $4 billion in next three to four years, mainly to expand 3G/4G technologies in the country. The demand of 3G/4G technology is immense in the country, which showed the number of subscribers using the high-speed Internet broadband services crossed 14 million mark.
In the letter, it was mentioned that the provincial government of Punjab has imposed tax on Internet but it removed this tax after realising its negative impacts on the socio-economic development of the province. Cellular operators urged Sindh and KP governments to remove tax on Internet for economic prosperity and social development of urban and rural societies in the provinces.
Since Pakistan Tehreek-e-Insaaf (PTI) in general and Khyber Pakhtunkhwa government in specific are putting special focus on education and youth development, broadband penetration will not only impact positively on academic ventures of the KP government but it will also help flourish the high-tech startup ecosystem involving young educated minds from the province, the letter stated.
Economic studies have proven that there is a positive relationship between broadband penetration and GDP growth in both high and low income markets as a ten percentage point increase in broadband penetration grows national GDP by 1.5 percentage points.