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Five-minute call tax: Pakistan telecom operators may withdraw call offers

Telecom operators in Pakistan such as Jazz, PTCL and Zong have expressed concerns over the new tax imposed on five-minute calls, saying it would force them to withdraw call packages that account for more than 90% of the total voice calls.

In a joint statement, these companies said the new tax was unimplementable and, if imposed, it would result in withdrawal of free minutes and bundles that are used by the majority of their customers.

“More than 90% of voice minutes are consumed through bundles,” the statement read. “If this facility is consequently withdrawn and normal rates are charged to the customers, their call rates will go up significantly.”

in a recent Senate speech, Finance Minister Shaukat Tarin said that Rs0.75 tax will be imposed on calls exceeding five minutes.

“We all strongly feel that this proposed taxation if implemented, will significantly retard the role of Telecom Industry in GDP growth of Pakistan,” the companies said.

According to them, tax on voice calls will go against the government’s vision of a Digital Pakistan. They claim that taxes on Pakistan’s telecom industry were already one of the highest in the world.

The implementation of the new tax on billing or charging platforms was almost technically impossible, and if forced upon the industry, it would cause major disruption and damage to the service model structure, they said.

Telecom operators also fear this tax on subscribers will lead to changes in consumption behaviours, which will shrink the industry’s revenues as subscribers would move to OTTs (such as WhatsApp). It may subsequently shrink the government’s tax collection from the industry instead of increasing it.

“Auditing this revenue stream will be prone to unsurmountable complications, as each call record will have to be analysed and audited. This means FBR will need to sniff through billions of call minutes to audit the same,” the telecom operators said.

“How would that be practically possible,” they questioned.

Furthermore, telecom companies said this new tax would affect the very poor and vulnerable section of the society the most.

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