Home » ECC Approves Phase-Wise Reduction in Taxes on Telecom Services

ECC Approves Phase-Wise Reduction in Taxes on Telecom Services

by faree

The Federal Minister for Finance and Revenue, Dr. Abdul Hafeez Shaikh, chaired the meeting of the Economic Coordination Committee (ECC) of the Cabinet here today.

The Economic Coordination Committee (ECC) has approved a phase-wise reduction in taxes on telecom services.

The Secretary of the Ministry of Information Technology and Telecommunication presented a summary of the taxation issues of the telecommunication sector.

A participant of the ECC meeting told Propakistani that all these tax relief measures for the telecom sector would be made part of the next Finance Bill 2020-21 and would be applicable from July 1, 2021 including abolition of the Regulatory Duty on Import of different kinds of telecom equipment.

Sources said that the said approved tax relief measures and reduction in taxes for the telecom sector would not be implemented during the current fiscal year. There are many qualifications to each of tax relief measures which were approved by the ECC. The government would include these reductions in taxes and other relief in the coming federal budget.

The sub-committee presented its recommendations to the ECC, and they were approved as endorsed by the Federal Board of Revenue (FBR).

The following recommendations have been approved by the Economic Coordination Committee:

  • Advance Income tax/WHT has been reduced from 12.5 to 10% w-e-f July 2021 and to be further reduced to 8% in July 2022. The phased-wise reduction will continue.
  • FED reduced from 17% to 16% in the federal capital. Harmonization in provinces to be included in the harmonization framework currently being concluded.
  • Government to accept Lahore High Court’s Judgment in favor of Ufone & Zong, implement it for all the mobile operators, and withdraw Rs. 250 issuance tax on the sale of new SIM cards.
  • Telecom Sector (All PTA Licensees) should be included in Division II of PART III of Income-tax Ordinance to grant relief of 3% minimum tax instead of 8%.
  • Pakistan Telecom Companies are dependent to import various equipment under HS Code 8517 and HS Code 8544. It was proposed that the Regulatory Duty on were equipment should be abolished. ECC approved that this will be actuated through a decision of the National Tariff Commission

When asked whether the abolition of the Regulatory Duty on Import of different kinds of telecom equipment would be made applicable through amendment in the RD related SRO, top officials added that the RD would also be abolished from the next fiscal year.

Previously, the ECC had constituted a sub-committee dated 20 October 2020, under the Chairmanship of the Adviser to the PM, Dr. Ishrat Hussain, for due deliberation.

The federal Minister for National Food Security and Research Syed Fakhar Imam, the federal Minister for Industries and Production Hammad Azhar, the Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, the SAPM on Revenue Dr. Waqar Masood, the SAPM on Power Tabish Gauhar, the SAPM on Petroleum Nadeem Babar, and the Chairman Board of Investment (BOI) Atif Bokhari also attended the meeting.

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