Postpaid customers Still Paying Taxes on Mobile Cards

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After a Supreme Court decision for suspension of mobile taxes, prepaid customers have been enjoying tax-free voice and data services in Pakistan since June 13th, 2018.

Postpaid customers, however, aren’t getting the same treatment as cellular companies have been taxing their postpaid customers like before, we have checked.

Mobile companies said that Supreme Court’s June 12th orders specifically mentioned prepaid cards for suspension of taxes and hence the court order isn’t applicable on postpaid.

One telecom company told ProPakistani that they had written to Supreme Court for clarification on taxes for postpaid customers almost a month ago, but a response is still awaited.

Mobile companies are taxing their postpaid customers on the following rates:

  • GST: 17.5 / 18.5%
  • Withholding Tax: 12.5%

While the number of postpaid customers is less than 0.5% of the entire base, the ARPU for postpaid customers is much higher than the prepaid customers.

Unfair Treatment?

Some postpaid customers think that they are treated unfairly as tax-relief — until a final decision is made — should be applied to everyone.

Others think that postpaid customers should be taxed as they are usually the high-end consumers who can afford to pay taxes. However, that’s just an assumption since not every postpaid user would be rich enough to come under tax-net.

One postpaid user, who wanted to remain unnamed, said that discriminatory behavior has been shown towards the postpaid users for years.  “This is not the first time that postpaid users are paying extra for services that almost equal in quality when compared to prepaid users”, said the postpaid customer.

Mobile companies think that they aren’t showing any discrimination, instead, they are just following orders and if anyone feels differently, they should go and contact the Supreme Court for any relief.

Future of Mobile Taxes

It may be recalled that the Supreme Court of Pakistan has asked FBR to formulate a way for taxing the mobile customers in a manner that only those customers who come under tax net are taxed.

Until any such formula is developed, mobile taxes are likely to remain suspended.

It must be mentioned here that federal government is losing some Rs. 120 million per day due to the suspension of withholding taxes while provincial governments (combined) are losing some Rs. 160 million per day due to suspension of GST on mobile services.

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