LAHORE  - Punjab Government has announced to exclude the internet services used by the public, educational institutions, corporate sector and the software exporting firms from the sales tax on services.
According to a notification issued here, Finance Department making amendments in the Punjab Sales Tax on Service Act 2012, exempted the internet services whether dialup or broadband including email, data communication network services (DCNS) and value added data services from the sales tax with immediate effect.
Furthermore, all charges payable on the international leased lines or bandwidth services used by the software exporting firms registered with the Pakistan Software Export Board will be exempted.
Data and internet service providers licensed by the Pakistan Telecommunication Authority would also be excluded from the tax, the notification added.
According to telecom industry experts, FDI is expected to slow down in telecom sector after introduction of heavy taxation by the provincial government of Punjab which constitutes 60 percent of the overall subscription of mobile phone companies including 60 percent of the mobile internet users out of 18 million.
They claimed that the overall revenues of the mobile phone companies have dropped significantly due to deduction of heavy taxes constituting half of their earnings (50 percent) at present which are unbearable for them in long-term, hence their investment to expand 3G/4G technologies network is inevitably affected. At times of auction of 3G/4G licenses, when operators invested millions of dollars, the government had honoured to facilitate cellular phone sector through incentives but it took u-turn apparently introducing new taxes on data services and mobile internet which is rarest in the world. Even, cellular phone companies had taken abided by directives of Federal Government, by letter and spirit, in rolling out Biometric Verification of Subscribers for selling SIM spending more than Rs 3 billion but their efforts and endeavors were not recognized in turn of tax relieves. This attitude discouraged operators to enhance their investments in future whereas consumers’ burden to pay taxes on telephony services was increased to all-time high level particularly in Punjab.
The unfavorable business environment of telecom sector and stubborn attitude of federal and provincial government (mainly Punjab Govt) was leading to the failure of next spectrum action which is expected to generate $500 million next year.