Pakistan’s telecom industry has submitted a comprehensive set of budget recommendations for FY2026-27, urging the government to reduce heavy taxes and duties that operators say are slowing digital growth and broadband expansion across the country.
The proposals were submitted through the Telecom Operators Association (TOA) to the Ministry of Information Technology and Telecommunication. Telecom companies argue that Pakistan cannot build a competitive digital economy while imposing a consumer telecom tax burden of nearly 34.5 percent — one of the highest in the region.
According to the industry, more than 30 percent of Pakistan’s population still lacks 4G coverage, while nearly 12 percent remain without even basic mobile network access. Fixed broadband penetration also remains below 2 percent nationwide.
Among the key recommendations is a reduction in withholding tax on telecom operators from 6 percent to 4 percent. Operators also want the tax to become adjustable instead of being treated as a minimum tax, arguing that the current structure creates severe cash flow pressure and discourages infrastructure investment.
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The telecom sector has additionally proposed cutting advance income tax on mobile usage from 15 percent to 8 percent. Industry representatives say the current tax system disproportionately affects low-income prepaid users and reduces mobile internet affordability for millions of Pakistanis.
Another major demand involves eliminating customs duties on 5G and telecom equipment, including network hardware, smartphones, batteries, SIM cards, and fixed-line infrastructure. Operators estimate that duty reductions could unlock nearly Rs. 12 billion in additional investment for network expansion and future 5G deployment.
The industry has also strongly criticized the extremely high import duties on fiber optic cables, which currently stand at nearly 67 percent. Telecom operators are asking the government to slash these duties to just 5 percent in order to accelerate broadband infrastructure development and improve internet connectivity nationwide.
The proposals come as Pakistan prepares for wider 5G deployment, with telecom companies already conducting network upgrades and spectrum planning. Industry stakeholders warn that without tax rationalization and policy reforms, Pakistan’s digital transformation goals may remain difficult to achieve.
