07/05/2020
Suspension of 12.5 percent withholding tax and grant/auction of additional spectrum
The government of Pakistan has accepted three major demands of cellular companies including industry status, suspension of 12.5 percent withholding tax and grant/auction of additional spectrum.
The demands were accepted during the high-level committee, constituted on the directive of Prime Minister to address the issues of cellular mobile operators and formulate recommendations.
Industry Status
Talking to this scribe, Secretary for Ministry of Information Technology and Telecommunication Shoaib Ahmed Siddiqui, who chaired the 2nd meeting of the committee said that the telecom sector was given an industry status backs in 2004, but the same was not implemented for the last 16 years. The committee has recommended the Ministry of Industries and Production to notify the industry status for the telecom sector.
The Ministry of Industries and Production had agreed to the proposal that the telecom sector should be given functional industry status.
NEPRA Tariff for Telcos
He further said that the National Electric Power Regulatory Authority ( ), which determines the tariff, has been asked to work it out for the telecom sector while treating it as an industry.
No More Withholding Tax
The federal secretary said that it was also agreed to suspend withholding tax of 12.5 percent for the telecom sector during the -19 period as a relief for cellular companies and consumers.
The committee recommended the Federal Board of Revenue ( ) to consider the recommendation for implementation, he added.
Additional Spectrum
The telecom operators shared serious interest in additional spectrum auction in Pakistan, and Azad Jammu Kashmir ( ) and Gilgit Baltistan ( ) to facilitate quality mobile broadband services necessary for people, especially students and professionals, to work from home and comply with COVID-19 related advisory.
The committee decided to move a summary to the Federal Cabinet while seeking a policy directive for auction/additional spectrum for telecom companies in Pakistan.
However, for AJK & GB, the committee recommended the Ministry of Kashmir Affairs to prepare a proposal in this regard, Siddiqui added.
Verification Charges
Some issues have already been raised with different concerned departments while some are related to policy matters and recommendations would be finalized for the federal cabinet soon.
was recommended to reduce charges of biometric verification of , especially in view of this situation after COVID-19 in the country.
Recommendations by the Telcos
According to official documents, telecom operators had prioritized some areas for a dialogue at the highest level for consideration and early resolution including:
Fair, transparent, predictable spectrum roadmap to help investors in taking predictable and informed decisions;
Immediate award of AJK/GB spectrum all four operators to accelerate broadband. Next Generation Mobile Services (NGMS) auction is pending in the AJK & NA and GB region. PTA being the adopted Regulator for AJK/GB needs to conclude NGMS spectrum auction as this will provide a level playing field to all operators and help in scaling up quality coverage of 3G/4G based networks. According to operators, it can help the government generate $100 million USD;
Release & harmonization of existing & future spectrum to maximize utility & government yields − Policy of government driving license renewals needs to be revised to allow release and harmonization of existing & future spectrum. This harmonization would also allow the government to award additionally available top-up spectrum, as per telecom Policy 2015, to all operators as per their respective additional demands and also bring additional revenue to the government to the tune of $500 million.
Continued collection by NADRA at very significant rates per verification has been a concern for the cellular industry as it is continuous cost for the cellular industry (around Rs. 140 million per month).
Since mobile operators invested into the whole biometric verification program any costs incurred by NADRA for setting up the biometric verification process have long been met many times over, it would be appropriate for the government to reduce the NADRA verification charges to at least the level of charges given to the financial service transactions.
