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Mini-budget: Coalition partner shows ‘ominous’ signs of rebellion

By Tahir Amin ISLAMABAD: Federal Minister for Information Technology and Telecommunication Syed Aminul Haque on...

By Tahir Amin

ISLAMABAD: Federal Minister for Information Technology and Telecommunication Syed Aminul Haque on Wednesday announced to oppose new taxes on the telecom sector in the special cabinet meeting to be held on Thursday (today).

Talking to media persons, the minister said that the thinking of the IT industry is the same as that of the IT minister. “We want no tax on the IT industry in the mini-budget,” said Haque, adding that if a new tax is imposed, he will stand with the people of the industry and will oppose it.

Responding to a question, the minister said that the matter regarding withholding tax would be known in the special cabinet meeting.

There are also rumours that taxes on computers and tablets would be increased. “As IT minister, I will oppose these decisions,” Haque added.

“I will put my petitions before the prime minister. I hope these things will not be taxed,” said the minister, adding that their target is to build about 40 more software parks in the country.

The proposed increase of five percent in the withholding tax (WHT) on telecom services and the standard rate of 17 percent sales tax on import of computers and accessories in the forthcoming mini-budget will severely impact the growth of the IT sector.

Haque said that the increase in taxes on the telecom sector would negatively impact the sector growth, as well as, investment prospects.

The government is likely to raise the WHT by 50 percent, increasing it from 10 to 15 percent on the telecom customers in the upcoming mini budget 2021-22. The government had brought down the WHT rate from 12.5 percent to 10 percent in the budget for 2021-22 and made a commitment that it would be further brought down to eight percent in the next budget for 2022-23.

However, the government is now mulling to reverse its decision to raise revenue, with a five-percentage-point hike in advance tax on the telecom sector. If the draft proposition is implemented, the cellular advance tax will be raised to a historic high of 15 percent.

The WHT is currently collected at a rate of 10 percent from all telecom users, regardless of their taxable obligations.

Majority of the country’s population has non-taxable incomes; these individuals are required to pay the WHT, which they will never be able to recover.

The Ministry of Information Technology and Telecommunication has opposed any move to impose 17 percent GST on import of computers and accessories, arguing that the move would severely impact the growth of the IT sector.

“If the government moves ahead with the imposition of GST at the standard rate of 17 percent on import of computers, laptops, and its others accessories it would negatively impact freelancing, IT exports and PM’s Vision to make Digital Pakistan,” official sources of the Ministry of Information Technology and Telecommunication (MoITT) said.

The policy move would increase input cost of necessary tools, making it difficult for freelancers and individuals to purchase laptops, computers, and accessories.

The minister for information technology earlier inaugurated Software Technology Park in Rawalpindi on Wednesday.

MD Pakistan Software Export Board (PSEB) Osman Nasir, Chairman Amazon Software Technology Park Shafiq Akbar, officers of the Ministry of IT and Telecom and the PSEB were also present.

Amazon Software Technology Park was established in collaboration with Pakistan Software Export Board and Amazon Mall.

Addressing the inaugural ceremony, Federal Minister Syed Aminul Haque said that Pakistan’s IT companies were providing services to world institutions in over 120 countries. He said that Pakistan’s IT industry was rapidly progressing and our IT exports are also increasing.

He said that technology was changing with every passing day, adding that we have to equip our youth with modern technology.

He said youth are country’s asset, adding that steps are being taken to connect the masses in rural areas with digital world. Connectivity is the topmost priority of the government and it is because of broadband facility we can connect with digital world, he said.

The federal minister for IT said that presently, 22 software technology parks were operative in small cities and we have set the target of taking the number of technology parks up to 40 by December 2022.

This article first appeared in Business Recorder on December 30, 2021

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