Industry status

WHT rates reduced to 10%: industry status for the proposed telecommunications sector

ISLAMABAD: Government proposed industrial status for telecommunications sector, reduced withholding tax rates from 12.5% ​​to 10% for tax year 2022, and 8% for telephone users due to mobile phone and Internet or prepaid phone cards, reduced rate of federal excise duty on telecommunications from 17% to 16%, and a reduced withholding tax rate of 3% on telecommunications services in the proposed finance law 2021-22.

According to the main features of the 2021-22 budget, the relief measures of the Customs Act of 1969 proposed the inclusion of telecommunications services in the definition of industrial enterprise.

According to the Notes to the Provisions of the Customs Act 1969 (Iv of 1969), the intention is to include “telecommunications companies operating under the license of the PTA” in the definition of industrial enterprise.

It further aims to reduce withholding tax rates from 12.5% ​​to 10% for the 2022 tax year and to 8% for users of mobile phones and prepaid internet or phone cards.

The bill proposed to exempt from withholding tax provisions payments received by the National Telecommunications Company for the provision of services.

In addition, it is proposed to reduce the federal excise duty rate on telecommunications from 17% to 16%.

In addition, the reduced withholding tax rate of three percent on petroleum services, warehousing services, logistics services, collateral management services and telecommunication services is offered.

However, in order to derive reasonable revenue from this sector, a federal excise on mobile phone calls exceeding three minutes at Re 1 per call, SMS messages at Re 0.1 per SMS and internet data usage at Rs 5 per GB is offered.

This will result in light taxation of a wide range of the population.

Tax Exemptions and Concessions for Roshan Digital Accounts and Implementation of Electric Vehicle and Mobile Phone Policy implemented in the Revenue Laws (Amendment) Order 2021 of 11.02.2021 is part of the draft law.

Copyright Business Recorder, 2021