LAHORE - Cellular phone companies have not received any notification yet from the Punjab government for removal or withdrawal of taxes on mobile internet or data services since its announcement made by the Minister of Finance Dr Ayesha Ghaus on June 12 in her budget speech.

Ministry of Finance, Government of Punjab introduced 19.5 percent tax on broadband internet connection of Rs 1,500 above and 2 Mbps above speed through SRO released on May 28. The tax implemented from May 29 and equally applicable on the users of 3G/4G technologies users.

After weeklong protest and advocacy campaign by different section of societies mainly on social media and digital publishers and bloggers who made their websites blackout, the Government of Punjab realized the negative impacts of tax on internet on economy and ultimately announced to withdraw it.

Despite announcement and assurance to cellular phone operators by Government of Punjab, Ministry of Finance, SRO with order to withdrawal of tax on internet tax was not received by any operators, which caused uncertainty among telecom sectors, digital publishers and bloggers.

Operators are optimistic that the Government of Punjab will honor its promise since the announcement was made in the provincial assembly. They believed that the governments of Sindh and KhyberPakhtunkhawa will also take the same measures to remove tax on internet.

Recently, all mobile phone companies as an industry have written a joint letter separately to CM Khyber Pakthunkhawa Pervaz Khattak and CM Sindh Syed Qaim Ali Shah in this regard.

These operators demanded of the provincial governments to wave off General Sales Tax (GST) on internet and data services that could immensely cease the penetration of 3G and 4G technologies throughout the provinces.

Tax on mobile internet is rare in the world besides Pakistan only Bhutan levied tax but it rate was mere 5 percent.

It may be mentioned that Sindh government is first to impose tax on internet in 2013-14, that is, 19.5 percent GST on Rs 1,500 internet connection or above 2mbps.

1. The tax was challenged in the courts, hence operators submitted taxes in court but these companies are giving the hefty amount from their own pocket avoiding passing on to consumers.

Cellular operators, in the letters, tried to explain the provincial governments of Sindh and KPK how investments on the rollout of 3G/4G network will be affected in the future if taxes are not removed on internet.

They added that cellular operators have invested $10 billion over the period of past one decade but they have planed further to enhance their investments up to $4 billion in next three to four years, mainly to expand 3G/4G technologies in the country.

Backed by cellular mobile operators, Internet Service Providers Association of Pakistan (ISPAK) and Pakistan Software Houses Association (PASHA), publishers and bloggers also written letter to KPK Government and Imran Khan urging the political leadership to realize the importance of the broadband internet in the development of province which will aid the political leadership in achieving target of economic prosperity and social upbringing.

Economic studies have proven that there is a positive relationship between broadband penetration and GDP growth in both high and low income markets as a ten percentage point increase in broadband penetration grows national GDP by 1.5 percentage points.