On May 7, 2026, Pakistan’s telecom industry submitted a series of fiscal and policy recommendations to the federal government for the 2026-27 budget. These proposals aim to enhance sector sustainability, accelerate digital inclusion, and support the government’s digitisation agenda.
The telecom sector, a crucial component of Pakistan’s digital economy, faces financial challenges due to high taxation, increasing operational costs, currency depreciation, and significant infrastructure investment needs. Despite its importance, Pakistan’s Telecom Sector lags behind regional peers in mobile broadband penetration and affordability.
Among the key recommendations, the industry suggests reducing the withholding tax under Section 153 of the Income Tax Ordinance, 2001, from 6% to 4% and making it adjustable. They also recommend extending the carry-forward period for turnover tax credits under Section 113 from two to five years, addressing cash flow constraints and investment limitations.
The industry also proposes reducing the advance income tax on telecom services under Section 236 from 15% to 8%, highlighting the impact of high taxes on low-income and prepaid consumers. The proposal calls for abolishing customs duties on importing 5G and fixed-line telecom equipment, estimating that this could unlock approximately Rs12 billion for network expansion.
Further recommendations include reducing duties on optic fibre cable imports from 67% to 5% and revoking the commissioner’s authority under Section 147(6B) to reject taxpayers’ advance tax estimates, aiming to improve business ease and taxpayer confidence.
These recommendations are positioned within the context of Pakistan’s digital economy ambitions, where over 30% of the population lacks 4G coverage, and fixed broadband penetration is below 2%. The industry argues that tax rationalisation could significantly boost digital and financial inclusion, citing studies that link broadband penetration with GDP growth.
Published in SouthAsianDesk, May 8, 2026
Follow SouthAsianDesk on X, Instagram and Facebook for insights on business and current affairs from across South Asia.
