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October 29, 2020

ECC forms committee to reduce taxes on telecom services


October 29, 2020

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday constituted a committee to reduce taxes on telecom services after considering the FBR’s concerns over the revenue impact of the taxation measures.

The ECC said the proposal of reduction in taxation on telecom services could be accepted to facilitate the sector.

It formed a committee consisting of advisers on revenue, institutional reforms and austerity, commerce and minister for industries and production to prepare a modified proposal in view of the FBR’s response for final approval.

The ECC decided in principle to abolish subscriber identity module tax and rationalise all adjustable taxes either by abolishing them or reducing the rates, according to people familiar with the matter.

The Federal Board of Revenue (FBR) opposed the proposal as it estimated Rs52 billion of revenue losses on the proposed taxation relief.

The telecom sector has been lobbying for the last several years for reducing the tax burden and argued that increased tax burden choked the sector’s growth.

Prior to the launch of 5G, now the telecom sector has again started lobbying for achieving reduction in tax burden.

The telecom penetration stood at 40 percent and with increased tax burden the sector finds it hard to increase it further.

Adviser to Prime Minister on Finance Hafeez Shaikh said the FBR should come up with a study so that the ECC can make informed decisions.

ECC also approved the summary moved by the ministry of energy (petroleum division) for the allocation of another 38 million metric cubic feet per day gas from three new wells to Sui Southern Gas Company, subject to all regulatory approvals.

The price of gas will be as per the applicable petroleum policy. The gas will be provided as per availability in the winter months.

ECC granted approval for the renewal of the contract with an Iran’s company for the purchase of 104 megawatts of electricity subject to vetting by the ministry of law and justice. The contract will be valid till 31 December, 2021, according to a statement.

The ministry of maritime affairs also presented another summary for the waiver of demurrage charges on Afghan transit cargo/ Afghan bound containers stranded at Karachi ports. Earlier the government had decided to ask the terminal operators to waive 75 percent of the demurrage charges on Afghan transit containers / cargo landing at ports from 22 March to 30 September amid the lockdown, including refund of demurrage charges already recovered from such importers of Afghan bound transit container/cargoes.

The minister for maritime affairs advised terminal operators to approach their principals for approval of 75 percent of demurrage charges by 5 October.

After the terminal operators showed their inability to accede to the ministry’s request, the matter was brought to the ECC for guidance.

ECC said the same committee that has been engaged with the terminal operators should again negotiate with the operators to reach an amicable solution to the issue.

ECC further approved the technical supplementary grant of Rs109.5 million to the ministry of defence for the survey of the coastal areas.

The amount was surrendered by the ministry of maritime affairs as the army has offered to assist in the survey.