Pakistan's telecom industry has submitted fiscal recommendations seeking lower withholding taxes and the removal of customs duties on 5G equipment [1, 2].

These requests aim to accelerate the rollout of 5G services and ensure the long-term sustainability of the sector. Industry representatives argue that the current fiscal burden hinders infrastructure investment and makes the market less competitive compared to regional neighbors [1, 2].

In proposals for the federal budget for fiscal year 2026-27 [1], representative bodies focused on the disparity between domestic and international tax regimes. A representative from the Association of Mobile Telephone Operators in Pakistan (AMTOB) said that operators currently pay about 56% [2] of gross revenue in taxes, VAT, and other charges.

This domestic figure stands in contrast to a global average of 22% [2] and an Asia-Pacific average of 26% [2]. The industry argues that such high costs stifle the ability of providers to modernize networks and expand coverage to underserved areas [1].

To address these challenges, the Pakistan Telecom Industry Association has proposed specific policy shifts. A spokesperson for the association said, "We propose a reduction in withholding tax and the abolition of customs duty on 5G equipment to make the sector sustainable" [1].

Industry leaders believe that removing these barriers is essential for the country to keep pace with technological advancements. By lowering the cost of importing critical hardware, operators could more aggressively deploy the next generation of wireless connectivity [1, 2].

“Operators currently pay about 56% of gross revenue in taxes, VAT, and other charges.”

The request for tax relief highlights a tension between the Pakistani government's need for federal revenue and the strategic goal of digital modernization. If the government rejects these proposals, the high cost of capital and equipment may delay the 5G transition, potentially widening the digital divide and leaving Pakistan's telecom infrastructure lagging behind its Asia-Pacific peers.