We are aware of the economical crisis coronavirus outbreak has brought to the world. Pakistan is equally or may be severely affected by the situation. Health is no more the only threat this virus poses, the financial threat maybe even bigger. Telecom operators in Pakistan joined hands to file a relief application with the government, here is why we think that the relief application had some outrageous demands.
1. Taxation Incentives
The following points enlist the demands of Telecom Operators to ease their business via reducing Tax collections.
- Federal Government to abolish the Withholding (WHT) till the COVID-19 outbreak continues.
- Federal and Provincial governments to rationalize GST @16%.
- Temporary suspension of applicable Taxes on Data services by the Federal and respective Provincial governments.
2. Reduction of NADRA ‘Biometric Verification’ charges
NADRA charges 23 rupees for CNIC and related data verification through BVS. It also charges 10 rupees on hits on simple biometric verification for all types of SIM cards.
Telecom Operators proposed the government to revisit these charges. Effectively, they could end up reducing Rs. 140 Million per month paid to NADRA.
3. Reduction in USF and R&D Fund contributions
Telecom Industry, in Pakistan, contributes 1.5% of its annual gross revenue (AGR) towards Universal Service Fund and 0.5% in R&D Fund.
Now the filling party urges the government to let go of this contribution fund for a period of two years. If not for two years, then at the very least implement a discount of 50% in the contribution.
4. 3G/4G Services in Kashmir & Gilgit Baltistan
Telecom Operators can’t offer 3G and 4G services in AJK and GB. They requested an affirmation to offer data services in these regions to around six million potential customers.
“We recommend an immediate availability/award of spectrum in 1800 and 2100 MHz bands to the CMOs to enable provision of reasonable mobile broadband services in the region”, urged the industry.
5. 50% reduction of Annual Regulatory Dues (ARDs) for a year
To limit the potential business impact due to a decline in revenues during the fight against Covid-19, mobile phone operators requested for 50% reduction in the upcoming payout of their Annual Regulatory Dues (ARDs) to PTA.
Now, there is no doubt that we have already spoken about the not so rational tax system imposed on these operators. Around 30% of a mobile card load goes into taxes (18.5% to 19.5% GST and 12%WHT) and thus the demands in the first point seem genuine.
About the rest of the demands, we think that there is nothing for the mobile phone consumers to cheer about. These demands, if approved, will only strengthen the balance of telecom operators. If it was about avoiding business impact, a mere relief in tax would do more than enough.
Considering the 23.4% hike in mobile phone data and calling services usage, we think that the project financial loss by these telecom operators was actually ill researched. We should join hands to fight the pandemic, such demands from the industry leaders would only promote self centered behavior. Which is not going to help the nation.