Pakistan’s Supreme Court suspended what it called “exorbitant tax deductions” on prepaid mobile top-up cards sold in the country, The Express Tribune reported.
Chief Justice Saqib Nisar, who ordered all taxes deducted on recharge cards to be suspended within two days, said PKR38.08 ($0.33) is collected by operators on a card costing PKR100: “This is illegal”, the newspaper reported Nisar as saying.
Levies on the cards include a federal excise duty, a withholding tax and a service/maintenance charge: a total of between 38 per cent and 42 per cent of the cost.
The court also called for a comprehensive plan to be formulated for deducting taxes on prepaid cards, the newspaper said.
In May, the court called for comments from all telecoms operators and the country’s attorney general over the legality of withholding taxes. In the latest ruling, Nisar said the law surrounding these payments “appears to be imperfect” The Express Tribune reported.
Mobile operators in the country have long complained about high taxes on mobile services. In a report released in 2015, The World Bank said Pakistan levies some of the highest taxes on telecoms services in the region and the third-highest tax on corporate profits in the world.
In May 2017 Pakistan’s government announced some relief, cutting the withholding tax on mobile services from 14 per cent to 12.5 per cent and federal excise duty from 18.5 per cent to 17 per cent.
The reductions came after years of pressure from operators and trade association GSMA, which argued taxation was slowing the growth of vital telecoms services.
Pakistan Telecommunication Authority data for April showed the country had 150 million mobile subscribers, with 55 million 4G and 3G users.