Cell phone companies hail cut in taxes
By Muhammad Yasir
KARACHI: The cellular phone companies hailed the government announcement to reduce different taxes on telephony services and termed it positive for the growth of subscribers in the next fiscal year.
In the Finance Bill 2009-10, the Federal Excise Duty/General Sales Tax (FED/GST) has been reduced to 19 percent from 21 percent. The SIM Activation Tax has been slashed to Rs 250 from Rs 500 per connection, Rs 250 regulatory duty has been removed and custom duties have been cut to Rs 250 from Rs 500 per handset.
Except the proposed cut in FED/GST, the stakeholders of the cellular phone sector have hailed other government measures. But they have shown unhappiness over the FED/GST cut and termed insufficient according to their demand to reduce it to 16 percent, the equivalent rate for other sectors.
Chairman Pakistan Telecommunication Authority (PTA), Dr Muhammad Yaseen sees the government’s budgetary step a catalyst to penetrate telephony services in the rural areas of the country.
He added that reduction of the proposed FED/GST and SIM activation taxes will also strengthen the revenues of the cellular phone and encourage them to introduce more technologies.
He added the new measures would boost inflow of investment generate revenue in if it retains in the next Finance Act.
Official of Samsung Mobile, Zeeshan Querishi hailed the government decision of cutting custom duties by 50 percent and removal of regulatory duties on the handset, saying it will have a positive impact on the retail prices of handsets.
The share of lower-prices handset consists of more than 40 percent in overall domestic market, which will promote the sales of mobile phone in the rural areas of the country, he added.
He predicted that this measure would recover the handset sales market across the country, which have witnessed a slump since the previous fiscal year, and strengthen the legal channel of trade by discouraging smuggling of handsets.
On the other hand, officials of the mobile phone operators said that companies had strongly suggest to level the FED/GST with other sectors.
An official of the mobile phone company commented that the 21 percent GST/FED have hit company’s revenue substantially and the proposed cut at 19 percent is not according to the companies expectations.
Another spokesman of mobile phone companies said the high consumption pattern is directly attributed to the FED/GST amount but if it should reduce to 16 percent in the next fiscal year, it will also improve the revenue growth of government and companies.
The mobile handset having value of under $100 could not be luxurious item,” he said and added that the government should have exempted and reduced the duties on small sized mobile sets so it could be used by the common man, he added.