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July 7, 2015

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Telecos demand Sindh, KP to withdraw GST on internet

KARACHI: Telecom operators demanded from the provincial governments of Sindh and KP 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.
In this regard, recently all mobile phone companies as an industry have written a joint letter separately to Chief Minister Khyber Pakhtunkhwa Pervaz Khattak and Chief Minister Sindh Syed Qaim Ali Shah.
Tax on mobile internet is rare in the world, besides Pakistan only Bhutan levied tax but its rate was mere five percent.
It may be mentioned that Sindh government was the first to impose tax on internet in 2013-14, that is, 19.5 percent GST on Rs1,500 internet connection or above 2mbps. The tax was challenged in the courts, hence operators submitted taxes in court, but these companies pay a hefty amount from their own pocket to avoid passing it on to the consumers, said telecos.
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.
On the other hand, Punjab government did not issue notification/ SRO for withdrawal of internet tax.
Finance Minister Dr Ayesha Ghaus on June 12 announced in her budget service the withdrawal of taxes on mobile internet or data services. However, cellular phone companies have not received any notification or SRO from Punjab government for removal or withdrawal of taxes on mobile internet or data services. Ministry of Finance, government of Punjab introduced 19.5 percent tax on broadband internet connection of Rs1,500 above and 2mbps above speed through SRO released on May 28. The tax implemented from May 29 and was equally applicable on the users of 3G/4G users.
After a weeklong protest and advocacy campaign by different sections of the society, mainly on social media, the government of Punjab realised the

negative impacts of the tax on the economy, ultimately announcing to withdraw it. Despite the announcement the SRO ordering withdrawal of tax on internet tax was not received by any operators, which caused uncertainty among the telecom sectors, digital publishers and bloggers, the Telecos official said.
The official said that cellular operators have invested $10 billion over the period of past one decade, and further plan to enhance their investments up to $4 billion in the next three to four years, mainly to expand 3G/4G technologies in the country.

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