Pakistan Among Highest-Taxed Countries for Mobile Services, Global Report Recommends Major Tax Cuts
Islamabad: Pakistan has been identified as one of the countries imposing the highest taxes on mobile services, with a new report by global economic research firm Frontier Economics recommending major reductions to support digital growth and economic development.
According to the report, the current combined sales and turnover tax on mobile services, which stands at 37 percent, should be reduced to 17 percent in order to encourage wider mobile and internet usage across the country.
Frontier Economics also recommended the complete abolition of the 15 percent advance income tax charged to mobile users, while suggesting that the annual regulatory duty be reduced from 2.5 percent to 1 percent.
The report further proposed reducing the General Sales Tax (GST) from 19.5 percent to 16 percent.
The research organization stated that lowering taxes on the mobile sector could significantly strengthen Pakistan’s digital economy, increase mobile internet adoption, and improve long-term government revenues through broader economic activity.
According to the report, Pakistan currently ranks among the countries with the heaviest taxation on mobile services. In addition to the 37 percent combined tax burden, mobile operators are also subject to a 29 percent corporate tax along with an additional 10 percent super tax on profits.
Frontier Economics emphasized that sector-specific taxes on mobile services should be aligned with those imposed on other industries, arguing that lower taxation would help accelerate digitalization, financial inclusion, and overall economic growth.
The report estimated that the proposed reforms could increase mobile operators’ revenues by around 6.4 percent while also significantly boosting the number of mobile users and mobile data consumption in the country.
It further noted that a one percent increase in mobile phone usage could contribute approximately 0.115 percentage points to per capita GDP growth. With reduced taxes, Pakistan’s per capita GDP growth rate could potentially rise from 4.2 percent to 4.5 percent.
The report also recommended removing additional charges related to mobile services, SIM cards, and access fees, while urging the government to incorporate tax reforms into Pakistan’s broader digitalization strategy.
