The imposition of tax on mobile phone calls lasting longer than five minutes is unlikely to be implemented, said Jazz CEO Aamir Ibrahim, citing concerns around its implementation and practicality.
The federal government, in its budget for the fiscal year 2021-22, said that while there will be no tax on mobile internet usage and SMS, a tax of 75 paisas will be charged on mobile calls that are longer than five minutes.
The move was widely criticised with almost all stakeholders believing this was a regressive tax.
Ibrahim, while talking to a private news channel, said the tax imposition will be difficult as it has various audit and implementation difficulties.
Telecom industry: Mobile operators collectively raise voice against tax proposals
“We are waiting for further details regarding the tax — how it will be implemented and audited,” said Ibrahim. “We think that the mechanism seems impractical and it is highly probable that it will not be implemented.”
He said that prepaid customers are in the majority in a number of countries, but none of them have implemented duration-based taxation.
“Its implementation will be difficult including for FBR audit purposes. We will need to review our billing system, as they are not currently capable,” said Ibrahim.
The CEO said users will adapt and change their behaviour if the tax is imposed. “Our experience suggests consumers put a lot of thought into their buying and conversation patterns. If there is a tax imposition after 5 minutes, they are likely to end the call in 4 minutes and 50 seconds. It may be an inconvenience for the consumer, but it will not benefit the government.”
The government’s decision to impose a tax of Rs0.75 is estimated to generate an additional Rs20 to 30 billion.
However, the Jazz CEO said tech-savvy consumers using smartphones will just use WhatsApp for communication. “Only the low-income group that has feature phones will be burdened with this tax.”
GSMA urges govt to withdraw FED on cellular calls
Days ago, the GSM Association (GSMA), in a letter to Finance Minister Shaukat Tarin, urged the government to withdraw the Federal Excise Duty (FED) on cellular calls. It said that the imposition will have a negative impact on demand and pose a significant risk for the government looking to achieve its Digital Pakistan Vision.
Ibrahim was of the view that the government should enlarge the size of the telecom sector, which generates a revenue of Rs600 billion. “There is ample room for further increase in size, we have a potential of 180 million customers and there are 35 million customers who have not availed any telecom service.
"We need to focus on increasing the topline growth," said Ibrahim, adding that this will be beneficial not just for companies but for the customers and the government.