Telecom companies in Pakistan have voiced their disappointment over being excluded from the government’s newly announced electricity tariff relief, despite being granted industry status in 2004. Prime Minister Shehbaz Sharif unveiled a Rs7.41 per unit reduction for domestic consumers and Rs7.69 per unit for industries, but the telecom sector was notably omitted.
Telecom operators argue that their long-standing denial of industry benefits continues to escalate operational costs. Kamal Ahmed, Secretary General of the Telecom Operators Association (TOA), pointed out that despite being granted industry status in 2004, the sector has not received corresponding benefits. The lack of tariff reductions for key telecom infrastructure, such as cell towers and data centers, remains a significant financial burden.
In addition to electricity tariff issues, telecom companies have raised concerns over the current tax regime. The TOA has urged the government to exempt telecom operators from withholding tax obligations under the Income Tax Ordinance (ITO) 2001, claiming that the existing system increases compliance costs and stifles industry growth. The association also advocates for the reversal of a provision in the Finance Act 2015, which imposed a fixed minimum tax rate of 4% on telecom companies, rather than allowing taxation based on actual earnings.
The TOA also criticized coercive tax enforcement measures, such as freezing bank accounts and sealing offices, arguing that these should only be applied to habitual defaulters. The association emphasized the need for a more equitable tax system that encourages industry growth instead of imposing arbitrary fixed rates.
As the government prepares the fiscal year 2025-26 budget, the telecom sector is pushing for urgent reforms to address its financial and regulatory challenges. These include targeted tax relief for telecom employees, who are struggling with rising taxes and inflation, which are making it harder to retain skilled talent. The TOA has also called for a reduction in income tax under Section 236 and a rollback of the Federal Excise Duty (FED) rate from 19.5% to 16%.
Kamal Ahmed concluded, “Lowering these rates would foster digital growth and long-term economic inclusion, without significantly reducing government revenue.”
