Key Points
- Study assessing economic impact of telecom tax cuts
- Broadband growth linked to higher economic output
- Affordable smartphones seen as key to digital inclusion
ISLAMABAD: The Global System for Mobile Communications Association (GSMA) is conducting an evidence-based assessment to determine whether reducing taxes on Pakistan’s telecommunications sector could accelerate broadband adoption.
According to GSMA, rationalising taxes would also strengthen the digital economy and ultimately generate greater government revenues than the current tax framework.
Speaking at a media roundtable titled “Digital Pakistan 2030: The Next Phase of Digital Transformation,” Julian Gorman, Head of Asia Pacific at GSMA, presented the study outline. He said the study aims to provide policymakers with concrete evidence on the fiscal and economic implications of lowering taxes on telecom services and low-cost smartphones.
The assessment coincides with Pakistan’s efforts to expand digital connectivity across the country while balancing fiscal commitments under its programme with the International Monetary Fund (IMF).
According to GSMA officials, the study is designed to offer policymakers practical options by quantifying how quickly initial revenue losses from tax reductions could be recovered. The recovery would be ensured through increased smartphone ownership, broader internet usage and an expanded tax base.
GSMA argues that affordability remains one of the biggest barriers to digital inclusion in Pakistan, particularly among lower-income households and rural communities.
The organisation is therefore examining taxes on entry-level smartphones alongside broader levies on the telecom sector.
“Governments require evidence-based policymaking, especially in an environment of fiscal constraints,” Gorman said, noting that the study is intended to provide data-driven recommendations rather than mere policy prescriptions.
ALSO READ: Pakistan Plans Telecom Tax Relief to Boost Digital Economy
The global mobile industry body has long maintained that digital connectivity delivers substantial economic benefits.
GSMA recommends increasing tax base more than rate
According to previous GSMA research, a 10 per cent increase in broadband penetration can contribute between 1 per cent and 2 per cent to gross domestic product (GDP). The Association highlighted the potential gains for economies with large populations and relatively low levels of digital adoption.
Pakistan, with a population of more than 250 million, continues to face a significant digital usage gap despite rising mobile penetration.
Millions of citizens remain without access to smartphones or mobile broadband services, limiting their participation in online commerce, digital financial services, education and e-government platforms.
GSMA officials said ongoing digitalisation initiatives by federal and provincial governments are helping create incentives for citizens to adopt smartphones.
They added that greater digital participation could improve tax compliance by bringing more economic activity into the formal sector.
Rather than increasing taxes on a relatively small base of existing taxpayers, expanding digital access could help governments broaden revenue collection over the longer term, they said.
The organisation also pointed to a historical investment gap in Pakistan’s telecom industry, driven partly by years of uncertainty surrounding spectrum allocation. That uncertainty constrained investment in network expansion and service quality.
However, following recent spectrum releases, mobile network operators are expected to invest billions of dollars over the coming years to expand broadband coverage, improve network performance and prepare for next-generation technologies.
Participants discussed ways to accelerate implementation of the government’s Digital Pakistan 2030 agenda, which aims to transform public services, improve digital inclusion and create a more competitive technology ecosystem.
To support those discussions, GSMA released a new paper, “Digital Pakistan 2030: Building Momentum for Sustainable Investment, Trust and Inclusive Growth.”
The document identifies five strategic priorities for the country’s digital future: creating investment certainty, accelerating digital inclusion, building trusted digital infrastructure, preparing for the artificial intelligence economy and strengthening national coordination.
The paper notes that Pakistan has made progress in several areas, including spectrum policy, mobile internet adoption, women’s digital inclusion, cybersecurity and collaboration between government and industry.
It also emphasises the need for continued investment in digital infrastructure, including fibre networks, data centres, energy resilience and future spectrum planning to support emerging technologies such as 5G and artificial intelligence.
GSMA further stressed the importance of digital trust, recommending stronger cybersecurity frameworks, enhanced digital identity systems, improved child online safety measures and greater cooperation to combat online fraud.
He added that achieving the goals of Digital Pakistan 2030 would depend on sustained collaboration between government institutions, industry stakeholders and development partners to ensure coordinated implementation across the country’s digital ecosystem.
