Pakistan has the highest mobile phone service tax rate in South Asia, according to the GSM Association (GSMA). The industry group warned that this is slowing digital growth and discouraging foreign investment.
The GSMA urged the government to cut taxes on telecom services and operators. It recommended lowering the current tax rate from 33 percent to make mobile services more affordable.
Currently, mobile services in Pakistan face an 18 percent sales tax and a 15 percent advance tax. The report noted that this combined rate is significantly higher than in other countries in the region.
For comparison, mobile service tax rates are 26 percent in Nepal, 23 percent in Sri Lanka, and 18 percent in India. In Southeast Asia, the rates are even lower—12 percent in the Philippines, 11 percent in Indonesia, 9 percent in Singapore, 7 percent in Thailand, and 6 percent in Malaysia.
The GSMA report said Pakistan’s high tax rate is a major barrier to the government’s Digital Pakistan vision. It is also limiting the sector’s ability to attract investment and expand connectivity.
It revealed that Pakistan’s mobile industry earns less than one dollar per user on average, compared with more than eight dollars globally. Taxes on operators, services, and devices are among the highest in the world, further squeezing the sector’s growth potential.
Industry experts say that lowering taxes could help increase mobile adoption, improve internet access, and encourage investment in new technologies. Without such reforms, Pakistan risks falling behind its regional peers in digital development.
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