Imposing a tax on phone calls longer than five minutes is unlikely to be implemented, Jazz CEO Aamir Ibrahim said, citing concerns over its implementation and appearance convenient.
The federal government, in its budget for fiscal year 2021-2022, said that while there will be no tax on the use of mobile internet and texting, a tax of 75 paisas will be charged on mobile calls over five minutes.
The move was widely criticized, with almost all stakeholders viewing it as a regressive tax.
Ibrahim, while speaking to a private news channel, said imposing the tax will be difficult as it presents various audit and enforcement challenges.
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“We are awaiting further details regarding the tax – how it will be implemented and audited,” Ibrahim said. “We think the mechanism seems impractical and it is highly likely that it will not be implemented.”
He said prepaid customers are the majority in a number of countries, but none of them have time-based taxation in place.
“Its implementation will be difficult, including for RBF audit purposes. We will have to review our billing system, as they are currently not capable, ”Ibrahim said.
The CEO said users will adapt and change their behavior if the tax is imposed. “Our experience suggests that consumers think a lot about their buying and talking habits. If there is a charge after 5 minutes, they are likely to end the call in 4 minutes and 50 seconds. This can be a disadvantage for the consumer, but it will not benefit the government. ”
The government’s decision to impose a tax of Rs 0.75 is expected to generate an additional Rs 20-30 billion.
However, the CEO of Jazz said tech-savvy consumers using smartphones would simply use WhatsApp for communication. “Only the low-income group that owns multifunction phones will be taxed. “
GSMA urges government to remove FED from cell phone calls
A few days ago, the GSM Association (GSMA), in a letter to Finance Minister Shaukat Tarin, urged the government to remove the Federal Excise Tax (FED) on cell phone calls. He said the taxation would have a negative impact on demand and pose a significant risk to the government as it seeks to realize its digital vision of Pakistan.
Ibrahim was of the opinion that the government should expand the size of the telecommunications sector, which generates a turnover of 600 billion rupees. “There is ample room for a further increase in size, we have a potential of 180 million customers and there are 35 million customers who have not used any telecommunications service.
“We need to focus on increasing revenue growth,” Ibrahim said, adding that this would be beneficial not only for businesses, but also for customers and the government.