karachi -
The mobile phone companies have urged the government not to impose activation tax on the subscription in the scenario when the sector has been hit hardly by the drop in sales and revenues in the wake of suspension of sales on 0.2 million retail agents. Representative of the mobile phone companies said that cutting-edge competition among the cellular phone sector firms over charges of different services coupled with ban on the SIM sales on the retail agents has diminished revenues significantly as they are unable to make revenues from new and old subscribers.
They added that already a discriminatory tax regime of 19.5 percent GST on all of its services in addition to 10 percent withholding tax has slowed down the utility of mobile phone telephony services, their earnings and revenues of the government. Cellular phone sector is not a profitable sector as it is deemed because of the fact its growth has turned into negative growth following the recent measures on the directives of outgoing government, an official of a mobile phone company said. The number of SIM sales is very limited despite new offers by the companies mainly in the untapped rural markets. Besides, the operators have cleaned up their subscribers base massively due to non-documentation and mismatch of subscribers record against his or her CNIC, he said on the condition of anonymity.
As per data of Pakistan Telecommunication Authority (PTA), the cellular phone companies witnessed contraction of 2.63 million subscriptions which stood at 120.9 million by February-end. PTA has delayed the implementation of subscribers and SIMs verification system due to absence of key officials but the losses are being suffered by cellular phone operators who could have added millions of new subscriptions in the last few months.
Besides, the sector will bring million of dollar foreign direct investment for the auction of 3G license and upgradation of their network, he said, adding hence they should be given incentives while refrain to impose activation tax again, which was wrongly slapped on them.
According to GSMA report, Pakistan is the third country having highest tax regime of overall 30.44 percent after Gabon and Turkey with rate of 37.2 percent and 48.23 percent. But the purchasing power of the masses in the country is quite lower than the two countries whereas the number of operators and lesser.
But the removal of activation tax recently heaved sigh of relief to the companies operating in Pakistan because operators used to pay this tax from their own pockets instead of receiving it from the masses.