Telcos Push Govt to End Customs Duty on 5G Devices, Reduce Taxes on Recharge in Budget 2026-27

Pakistan’s telecom industry has submitted a set of fiscal and policy recommendations for the Federal Budget FY2026-27, aimed at improving sector sustainability, accelerating digital inclusion, and supporting the government’s broader digitization agenda.

The proposals, submitted through the Telecom Operators’ Association to the Ministry of Information Technology and Telecommunication (MoITT), focus on reducing the cost of connectivity, enabling faster broadband expansion, and improving the investment environment for telecom infrastructure and next-generation technologies.

The industry noted that despite telecom’s role as a key enabler of Pakistan’s digital economy, the sector continues to face mounting financial pressure from high taxation, rising operational costs, currency depreciation, and increasing infrastructure investment requirements.

The proposal argued that high upfront taxation on mobile usage disproportionately impacts low income and prepaid consumers, suppressing digital adoption and limiting access to essential digital services.

The industry further proposed abolishing customs duties on the import of 5G and fixed line telecom equipment, including network infrastructure, smartphones, servers, batteries, SIM cards, and related telecom components.

According to the proposal, high import duties significantly increase deployment costs for operators and slow the rollout of next generation connectivity technologies, particularly in rural and underserved areas. Telecom operators estimate that duty rationalization could unlock approximately Rs. 12 billion in additional capital deployment for network expansion and digital infrastructure.

The telecom sector also recommended reducing overall duties and taxes on optic fiber cable imports from approximately 67 percent to 5 percent, arguing that high fiber deployment costs have become a major bottleneck for broadband expansion in Pakistan.

The industry additionally proposed withdrawing the Commissioner’s authority under Section 147(6B) of the Income Tax Ordinance, 2001 to reject taxpayers’ advance tax estimates, stating that the current mechanism increases disputes, litigation, compliance costs, and uncertainty for businesses.

The recommendations were submitted in the context of Pakistan’s digital economy ambitions and its ongoing connectivity challenges.

According to the proposal, more than 30 percent of Pakistan’s population remains uncovered by 4G services, while approximately 12 percent still lacks access to basic mobile signals. Fixed broadband penetration remains below 2 percent, and consumer taxation on telecom services stands among the highest in the region at 34.5 percent.

The industry maintained that enabling a more sustainable investment environment for telecom operators would help accelerate digital inclusion, broadband expansion, financial digitization, and wider economic growth across Pakistan.