Pakistan Daily Times
‘SIM activation tax hurting mobile industry’

ISLAMABAD: The GSM Association (GSMA), a global association of mobile phone operators, while terming the tax on mobile phone connections or SIM card activation tax as an impediment in the growth of the mobile phone industry, has demanded its total elimination.

Based on the findings of the study conducted by leading tax consultancy Deloitte, the GSMA has projected that the total elimination of Rs 500 SIM card activation tax would result in revenue growth of up to 60 percent, because of expansion of services in remote rural areas and attracting fresh foreign direct investment in the country.

However, the findings of the study further indicate that reduction in activation tax from Rs 500 to Rs 250 would result in 25 percent growth in revenues and would enable the authorities to generate 32 percent additional revenue from the industry. Ricardo Tavares, Senior Vice-President Public Policy of the GSMA, along with representatives from country’s mobile phone operators Mobilink, Telenor, Ufone, Paktel and Warid, speaking at a media briefing said that elimination of activation tax is necessary for the growth of the industry and penetration of mobile phone service in rural areas.

He said that the study has projected that elimination of activation tax on SIM cards would lead to an increase of between 3.6 percent to 4.3 percent in gross domestic product (GDP) generated by Pakistan over the 10 years during 2007-2017. This economic growth, combined with a reduction in the activation tax on mobile SIM cards in Pakistan would boost mobile usage and spur economic growth. The study found that greater usage of mobile phones in Pakistan would improve communication between businesses and their customers, fuelling economic development and increasing tax receipts from across the wider economy, he added.

“A series of studies commissioned by the GSMA have shown that levying special taxes on the mobile industry is counterproductive as rising mobile usage is a major engine of economic growth in developing countries,” he said.

* Ricardo Tavares is the Senior Vice President for Public Policy, GSM Association (rtavares@gsm.org).