The tax conflict between provincial governments and Long Distance and International (LDI) telecom operators has been escalated to the Special Investment Facilitation Council (SIFC) for resolution. The Ministry of IT and Telecommunication revealed that LDI operators are challenging provincial taxes on international voice services, claiming they exceed constitutional limits.
The dispute, unresolved for years, has prompted the Ministry of IT to seek SIFC intervention after failed negotiations. LDI operators, whose licenses mostly expired between July and August 2024, face not only tax issues but also outstanding payments to the Universal Service Fund (USF).
While the Ministry of IT and provincial governments argue that the taxes are standard practice, the Ministry suggested involving an impartial entity to mediate and resolve the issue. They also recommended that the Law Division and Attorney General review both domestic and international regulations to clarify the legal standing of the taxes.
Additionally, the Ministry updated the SIFC on the National Cloud Procurement Framework, adopted by Khyber-Pakhtunkhwa (K-P), Gilgit-Baltistan (G-B), and Azad Jammu and Kashmir (AJK). However, AJK and G-B need to finalize their Cloud Policies and provide a timeline for adoption to the federal government.
The telecom sector faces ongoing challenges, including previous taxes on smartphones and issues from the Telenor-PTCL sale. Government policies, like linking license fees to the dollar exchange rate, have also hindered industry participation in spectrum auctions. Heavy taxation continues to burden the sector, complicating efforts to address other critical issues.
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