The Ministry of Information Technology and Telecommunication (MoITT) has proposed major tax relief measures for Pakistan’s telecom sector to attract new investment, create jobs, and improve digital connectivity across the country.
According to sources, the ministry has asked the government to introduce a wide range of fiscal incentives for telecom companies. These include exemption from withholding tax, lower import duties on telecom equipment and reduced taxes on mobile phone components.
The ministry believes the telecom industry now plays a central role in Pakistan’s digital economy. Officials say stronger support for the sector can help speed up economic growth and technological development.
Sources revealed that the telecom sector invested nearly $5 billion during the last five years. During the same period, the industry contributed around Rs1.7 trillion in taxes to the national exchequer. At present, the sector generates almost Rs400 billion in annual taxes and provides services to nearly 200 million subscribers nationwide.
Officials also highlighted the industry’s strong tax compliance record. Therefore, the ministry has recommended removing the current 6 percent withholding tax on telecom companies.
According to officials, telecom operators currently pay taxes in advance and wait months for adjustments through the reconciliation process. They argue that this system creates unnecessary financial pressure on companies and affects cash flow.
The telecom sector is fully compliant with tax laws and regulations. There is a strong case for exempting it from withholding tax to improve liquidity and encourage further investment in network expansion and technological upgrades,” an official said.
The ministry also referred to the sector’s recent $510 million commitment for spectrum acquisition. The investment aims to support next-generation mobile services, including 5G rollout in Pakistan.
In addition, the ministry has proposed reducing taxes on imported telecom equipment. Officials believe lower import costs would help companies deploy network infrastructure faster and introduce advanced digital services more efficiently. The proposed relief includes cuts in customs duties, additional customs duties, and regulatory duties on telecom equipment imports.
Officials noted that regulatory duties usually apply to luxury or non-essential products. However, they argued that telecom infrastructure has now become essential for economic growth, businesses, education, healthcare and public services.
“The telecom sector can no longer be treated as a luxury industry. Digital connectivity is now an essential service and a key enabler of economic activity,” sources quoted ministry officials as saying.
The ministry has also recommended lowering taxes and duties on components used in local mobile phone manufacturing and assembly. Officials say this move would make smartphones more affordable and support wider digital inclusion across Pakistan.
According to the ministry, reduced taxes on handset components would strengthen local manufacturing, encourage fresh investment and create employment opportunities. It would also improve smartphone access for lower-income consumers.
Industry stakeholders have repeatedly called for an investment-friendly tax structure to improve broadband coverage, enhance service quality and support Pakistan’s shift toward 5G services.
The ministry believes these proposed incentives can accelerate the country’s digital transformation. Officials say lower taxes, reduced import costs and support for local manufacturing would attract local and foreign investment while increasing the telecom sector’s contribution to the economy.
