Skip to content
Photonews Logo Photonews logo
  • Home
  • Pakistan
    • Punjab
    • Sindh
    • Khyber Pakhtunkhwa
    • Azad Jammu Kashmir
    • Balochistan
    • Gilgit – Baltistan
  • World
  • Business
  • Entertainment
  • Videos
    U.S. Navy SEAL Jocko Willink in 2024 on the “Jocko Podcast” that his unit took part in the operation that captured Yaqoubi.
    Videos

    Iraq: Mustafa Yaqoubi Arrest Preceded 2004 Sadr Uprising

    September 17, 2026 2 Min Read
    Fox NFL Reporter Erin Andrews 2009 hotel video
    SportsVideos

    Fox NFL Reporter Erin Andrews Recalls Career Fears After 2009 Hotel Video

    September 12, 2026 1 Min Read
    Sharon Stone ‘Orbs’ During Stroke Recovery
    Videos

    Sharon Stone Recalls ‘Orbs’ During Stroke Recovery

    September 12, 2026 1 Min Read
  • Sports
  • Technology
  • Offbeat
  • Blog
  • Contact
Reading: Tax on internet pulls down economy
PhotoNews PakistanPhotoNews Pakistan
Font ResizerAa
Search
  • Home
  • Pakistan
    • Punjab
    • Sindh
    • Khyber Pakhtunkhwa
    • Balochistan
    • Azad Jammu Kashmir
    • Gilgit – Baltistan
  • World
  • Business
  • Entertainment
  • Videos
  • Sports
  • Technology
  • Offbeat
  • Blog
  • Contact
Have an existing account? Sign In
Follow US
© 2022 Photonews. All Rights Reserved.
Tax
PhotoNews Pakistan > Business > Tax on internet pulls down economy
Business

Tax on internet pulls down economy

Web Desk
By Web Desk Published August 17, 2015 7 Min Read
Share
SHARE
Islamabad: In the present age, internet is perhaps the single most important driver of innovation, competitiveness and growth.

Digital economy is rapidly growing everywhere. Pakistan has been rather slow on the uptake but the PML-N government must be credited for giving it a boost by auctioning the long-awaited 3G and 4G telecom spectrum. Not only has the government earned about $1 billion from this auction, but this also helped internet penetration achieve a phenomenal growth of over 300% within a year.

The number of internet subscriptions increased from a meagre 3.8 million in June 2014 to 16.9 million by June 2015.

While the government deserves kudos for what it achieved in 2014, its appetite for gouging more taxes from the telecom sector is a matter of great concern. With the exception of the Punjab government, all other provinces and the federal government are competing to tax the internet.

While the federal government imposed 14% withholding income tax, the governments of Sindh, Khyber-Pakhtunkhwa and Balochistan have levied 19.5% GST. There is still no certainty if the tax should be applied to mobile data usage, but the service providers have been collecting it since the beginning of the current financial year.

Steps backward

Levying taxes on internet data usage is a retrogressive step. Internet penetration in Pakistan is one of the lowest in the world, despite its steep climb during the last one year.

An important factor responsible for this is the high taxation rate on IT-related hardware. In fact, Pakistan is included amongst the five countries of the world that levy the highest taxes on IT-related goods and services.

According to a recent study by Deloitte (UK), during 2011, taxes in Pakistan were found to represent 30.44% of the cost of mobile ownership, which was the third highest level of taxation found in a sample of 111 countries.

The study further noted “the mobile sector accounted for 7% of the $31.5 billion in tax revenue collected in 2013. By reducing and rationalising taxes on the mobile sector, the Pakistani government can not only increase digital and financial inclusion and economic growth, but it can also generate higher tax revenues through more efficient and broad-based taxation. Furthermore, reforming mobile taxation has the potential to increase and enable the investment required to further expand mobile broadband network infrastructure.”

In India, Modi government’s high priority is digitisation. Their target is that every second Indian should be an internet user by 2018. Their goal is achieving an economy worth $200 billion through internet-related activities in three years.

It is a pity that while India is already ahead and is making every effort to promote the use of internet technology in every field, in Pakistan the federal as well as some of the provincial governments are levying new taxes and imposing regulatory restrictions to limit its use.

YouTube is already banned. The Pakistan Telecommunication Authority has issued instructions for imposing restriction on Blackberry services for security reasons from December 2015.

Relation with economic growth

Studies by the World Bank show that a 10% increase in broadband penetration could accelerate economic growth by 1.38%.

Punjab is already far ahead of other provinces in terms of literacy and use of technology. By giving free laptops, it has enabled many poor students to compete with those from more privileged backgrounds. Growing use of internet in Punjab for e-governance, in healthcare, education, financial and agricultural information services is already yielding outstanding results.

Obstructing the use of internet will seclude other provinces from the digital revolution. If the present trend continues, a serious inter-provincial digital divide will result. As it is, K-P and Balochistan already lack industrial base and also do not have any serious services enterprises.

Small and medium enterprises will be major losers in those provinces. A recent EU study showed that SMEs that have actively engaged with consumers on the internet have experienced sales growth rates that are up to 22 percentage points higher over three years than those companies in countries with low or no internet presence.

What should be done?

Our priority should be to digitise Pakistan and ensure that all government departments make use of this technology. Some departments of the federal government such as NADRA and passport office have made life easier for ordinary Pakistanis through adoption of digital technology. If other government departments were to adopt this technology, delivery of government services will become far more efficient.

Every year a large number of new Pakistanis enter the job market but only a limited number can be absorbed. Our government should train and encourage youngsters to tap the international IT markets where millions of jobs are posted annually.

There are several global online work platforms where businesses and independent professionals connect and collaborate remotely. For example, there are over 200,000 Pakistani freelancers working with oDesk. The Women’s Digital League is a successful example of a Pakistani internet business where women provide digital services to clients from around the world.

What is the way forward? The most important step will be for the federal as well as provincial governments to encourage the growth of information technology rather than create impediments. Like most other countries, we should join the Information Technology Agreement and agree to eliminate tariffs on information technology products.

The government needs to move towards a knowledge-based economy, which relies on application of technology. It needs to encourage knowledge-based industries and make maximum use of the IT revolution. This is a great opportunity to integrate our economy into the world economy and enhance our economic growth to reduce poverty.

The writer served as Pakistan’s Ambassador to WTO from 2002-08

Share This Article
Facebook Twitter Pinterest Whatsapp Whatsapp LinkedIn Email Copy Link Print
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement

Bank Alfalah Pehchan account

Recent Posts

U.S. and Iran flags shown in diplomatic tension graphic.

Iran Armed Forces More Prepared Than Ever, Commander Says

Claude AI displayed across desktop and mobile devices in an editorial technology collage.

Anthropic Updates Claude Usage Policy To Ban Sustained Abuse

A close-up image shows a U.S. permanent resident card placed in front of an American flag.

US Suspends Microsoft, Adobe From Green Card Programme

Post Archives

More Popular from Photonews

A U.S. military bomber sits on the runway behind a security fence at an air base.
Top NewsWorld

US Bases in Germany Face Iran Threat, Officials Say

2 Min Read
Karachi Water and Sewerage Board logo displayed over a water treatment or supply facility.
Sindh

Karachi Water Corporation Denies Unauthorised Salary Deductions

1 Min Read
Anthropic CEO Dario Amodei at an AI summit.
TechTop News

Dario Amodei Pay Totals $18 Million in 2025, Filing Shows

2 Min Read
Pakistan

Pakistan, IMF Reach Staff Deal for $1.21 Billion Funding

ISLAMABAD: Pakistan and International Monetary Fund (IMF) staff reached an agreement on programme reviews, the lender…

October 8, 2026
Sports

Cristiano Ronaldo Salutes Messi After Argentina Farewell

Portugal captain Cristiano Ronaldo paid tribute to Lionel Messi on Wednesday after the Argentina captain’s international…

October 8, 2026
Entertainment

Megan Fox Video: Letterboxd Disables Instagram Comments

Letterboxd disabled comments on an Instagram video featuring actor Megan Fox and director Karyn Kusama after…

October 6, 2026
Top NewsWorld

France School Protests Draw 86,000 Marchers, Ministry Says

PARIS: Students, staff and parents joined France’s school protests on Tuesday morning, demanding teachers, shorter days…

October 6, 2026
PhotoNews Pakistan

Always Stay Up to Date

Subscribe to our newsletter to get our newest articles instantly!

    Categories

    • World
    • Pakistan
    • Punjab
    • Sindh
    • Khyber Pakhtunkhwa
    • Balochistan
    • Azad Jammu Kashmir

     

    • Top News
    • Business
    • Entertainment
    • Sports
    • Videos
    • Tech
    • Offbeat
    • Blog
    • About Us
    • Privacy Policy
    • Code of Ethics & Editorial Standards

    © 2026 Phototnews
    All Rights Reserved.

    Welcome Back!

    Sign in to your account

    Lost your password?