Key Points
- Islamabad is weighing tax incentives for telecom and broadband sectors in Budget 2026-27
- Industry has sought lower taxes on mobile services, fibre imports and 5G equipment
- Government aims to support digital infrastructure, investment and wider internet access
ISLAMABAD: Pakistan is considering a series of tax incentives for the telecom sector in the upcoming federal budget for 2026-27 as the government seeks to accelerate broadband expansion and 5G rollout.
The annual budget proposals are aimed at strengthening the country’s digital economy agenda, a senior official at the finance ministry said.
The official privy to the ongoing budget consultations said policymakers are reviewing proposals to reduce taxes on internet services, lower import duties on telecom infrastructure and rationalise consumer levies on mobile connectivity.
The measures are proposed in the wake of Pakistan’s attempts to improve digital connectivity, attract investment into telecom infrastructure and expand internet access in underserved regions.
According to industry proposals submitted for budget deliberations, telecom operators have urged the government to reduce withholding tax under Section 153 of the Income Tax Ordinance from 6 per cent to 4 per cent.
The industry demands an adjustable withholding tax instead of a minimum levy.
Major industry operators have also requested a reduction in advance income tax on telecom services from 15 per cent to 8 per cent.
High consumer taxes discourage digital adoption, particularly among low-income prepaid users, the official said, quoting the industry proposals.
The industry has further proposed abolishing customs duties on the import of 5G and fixed-line telecom equipment, including network infrastructure, servers, batteries and related components.
High import costs are slowing investment in next-generation connectivity, the industry argued in the sector’s budget proposals..
The reduction of duties and taxes on fibre optic cable imports from around 67 per cent to nearly 5 per cent is also proposed as a drastic measure to significantly lower broadband deployment costs and support nationwide fibre expansion.
The official conceded that the government increasingly views affordable broadband and digital infrastructure as essential for economic growth, export competitiveness and the expansion of Pakistan’s information technology and freelancing sectors.
Separately, the government is also reviewing proposals to provide relief on mobile phone taxes for overseas Pakistanis visiting the country, following repeated complaints over high regulatory charges on imported devices.
The federal budget for fiscal year 2026-27 is expected to be presented in the coming weeks, with digital infrastructure and technology investment likely to feature prominently in the government’s economic reform strategy.
