HomeTechSenate panel recommends reinstatement of telecoms tax exemptions

Senate panel recommends reinstatement of telecoms tax exemptions

The Senate Standing Committee on Information Technology and Telecommunications on Tuesday recommended tax exemptions to the telecom sector that were repealed in the mini-budget.

The committee met with Kauda Babar as chairman in Islamabad on Tuesday.

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The chairman of the Pakistan Telecommunications Authority (PTA), Major General Amir Azeem Bajwa, said telecom operators should invest Rs 50 billion in upgrading their infrastructure to meet the improved service quality benchmarks.

He went on to say that telecom companies’ operating costs rose due to an increase in the tax rate, depreciation of the rupee and inflation, and as a result their profitability fell.

“The government has raised $2.24 billion directly from telecom operators through spectrum auction and licensing over the past two years (2019-21) in addition to half indirectly,” he said.

Chairman PTA informed the committee that the 5G spectrum auction in the country is expected by the end of this year or in the first quarter of next year. While briefing the committee on the plan to auction spectrum, he said the government has formed an advisory committee headed by the finance minister. After finalizing the plan, a consultant with an international reputation would be hired.

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Senate House Leader Dr. Shahzad Waseem said that why only one operator, namely Ufone, participated in the latest auction. Chairman PTA said it was the only operator left in the previous auction and needed spectrum. However, other operators had invested a massive $1.3 billion in license renewal in 2019 and were also given spectrum in previous auctions. Furthermore, the other operators probably focused on the upcoming 5G auction and did not participate in the latest auction.

Chairman PTA said that the government is always committed to facilitating telecom operators, but the industry has some problems that should reduce their profitability. Pakistan is still an attractive market with large subscribers, he noted.

The Ministry of ICT has enlisted the help of the Standing Committee to restore the tax exemption. The standing committee assured the cooperation and advised tax exemptions to the telecom sector.

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Senator Afnanullah Khan asked about the talks with SpaceX and Starlink. The chairman of the PTA informed the committee that talks are underway with StarLink about offering cheap internet, but they must comply with legal obligations. Once the regulatory issues are resolved, StarLink will launch its service, which will provide low-cost internet access, especially to people living in remote areas.

The National Information Technology Board Act 2022, passed by the National Assembly, was revised. Officials from the Ministry of Information Technology and the NITB told the committee that the aim of the bill is to make the NITB an autonomous body so that the institution’s work can be further accelerated and improved by removing obstacles.

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Officials said NITB as a subsidiary often faces financial slowdowns, hurting the fast-growing industry, especially IT. Senator Dr. Shahzad Waseem, leader of the House of Representatives in the Senate, asked what the effect of the autonomous status of NITB would be and what would benefit the country.

In response, ministry officials said NITB has successfully provided high-quality IT services to the government of Pakistan, including e-office, NCOC applications, and others. He went on to say that NITB was also working on human resource development. “Before you start a project, you have to go through a long process to get PSDP grants that are not suitable for a field like IT. Creating an autonomous body will eliminate unnecessary delays and improve the decision-making process,” he added.

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The committee chair indicated that the bill would be reviewed clause by clause at the next committee meeting.

The committee expressed its dissatisfaction with NITB’s Track Application. The NITB had introduced a pass-track application for international travel during the Corona epidemic. Pass track application has created problems for passengers instead of convenience. dr. Shehzad Wasim, leader of the House of Representatives in the Senate, said he suffered for hours due to flaws in the app.

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