Cellular operators oppose move to jack up WHT by 50pc

ISLAMABAD: The Cellular Mobile Operators have opposed the government’s move for jacking up the Withholding Tax (WHT) by 50 percent, increasing it from 10 to 15 percent on customers in the upcoming mini budget for 2021-22. The federal cabinet is most likely to take up the Tax Laws Fourth Amendment Bill for approval in today’s meeting (Tuesday) under the chairmanship of Prime Minister Imran khan.

The sources said that the government had brought down the WHT rate from 12.5 percent to 10 percent on the eve of the last budget for 2021-22 and it made a commitment that it would be further brought down to 8 percent in the next budget for 2022-23.

"Now the government is making reversal from its commitment, then how investment can be lured in such circumstances when there is no certainty in policies,” said the sources working in telecom sector and added that it would be disastrous if the internet services or SMS would be brought under the tax net.

The cabinet had opposed such moves in the last budget and it was hoped that it would be resisted again because if the WHT was jacked up by 50 percent, then no one from the market would trust any official word from the incumbent government.

"How the CMOs could put in place medium to long term investment plans when there is complete uncertainty in policy-making process,” they raised the question and added that under the IMF program, this booming sector would be made a scapegoat for the short-term objectives.

The government is looking to increase the WHT from 10pc to 15pc in the upcoming mini-budget -- a reversal of the WHT reduction announced in the federal budget 2021-22, just a reflection of the overall governance model pursued by the incumbent regime.

They also argued that out of over 220 million, approximately 2.9 million file taxes, which is one percent of the total population.

Even though a majority of the country's population had non-taxable income, they are paying the WHT, which they can never claim back. So this kind of withholding tax becomes part of national kitty although it was claimed by the official circles that it was adjustable and refunds could be taken back after filing due Income Tax return.