The Federal Board of Revenue (FBR) has been directed to create a structured penalty table for non-filers and reconsider its policy of penalizing telecom companies when non-filers are forced to pay a 75 percent direct tax on mobile recharges.
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Today, Senator Salim Mandviwala chaired a meeting of the Senate Standing Committee on Finance and Revenue, focusing on tax proposals affecting the telecom sector.
A representative from the telecom industry highlighted that the sector represents the largest investment in the country. He pointed out that non-filers face a 75 percent tax on mobile recharges, drastically reducing the value of mobile top-ups.
The representative mentioned that the telecom industry has invested Rs. 100 billion in internet infrastructure but is now struggling, with only two companies remaining operational in Pakistan. He noted that many companies have already exited the market, and another is on the verge of leaving. Telecom companies, which invest billions in spectrum purchases, are also being heavily fined for not switching off SIM cards as required by regulations.
He stated that the World Bank has allocated $72 million for digitization efforts in Pakistan, yet the telecom industry remains the highest-taxed sector. When asked by Mandviwala whether the industry sought the abolition of taxes or fines, the representative clarified that they wanted an end to the fines and a rollback of the tax hike. They argued that telecom companies should not be treated as law enforcement agencies.
Currently, telecom companies face fines ranging from Rs. 100 million to Rs. 200 million for not blocking SIMs within 15 days. The penalty for non-compliance is drastically disproportionate compared to the Rs. 10,000 penalty for not paying taxes, the representative added.
Chairman FBR Amjad Zubair Tiwana noted that the law targeting non-filers was introduced in 2022 and was not challenged at that time. He mentioned that 500,000 non-filers had previously filed returns and were issued notices to become filers. Under the 2022 Act, a list was published, and SIM blocking began, with companies given 15 days to comply.
The Senate Finance Committee recommended that the FBR review the penalties on telcos for not blocking mobile SIMs and address issues related to the 75 percent tax on non-filers.
