The era of tax impositions and trade barriers - a call for redefining the legislation

In the digital age, it's high time we rethought taxation - turning it into the fourth "T" in our nation's journey. A year later, this idea feels more important than ever. Today, we need to transition from Technology to Transparency to Trust, ensuring our systems foster inclusivity, resilience, and sustainable growth.

Pakistan is standing at a critical juncture. We're grappling with various challenges - economic, social, and digital - but opportunity knocks too. As we tread through turbulent waters, the question arises: how do we create systems that elevate our people's lives and livelihoods?

The solution lies in constructing intelligent and inclusive digital landscapes. Whether it's fostering a cashless economy, enhancing digital access, or fostering formalization, technology is no longer a niche - it's the bedrock of everything.

Taxation sits at the core of this revolution. The Overseas Investors Chamber of Commerce and Industry (OICCI), representing over 200 prominent foreign investors in Pakistan, recently suggested taxation reforms as part of their annual budget recommendations to the federal government. Amongst various sectoral insights, they addressed vital issues concerning the telecommunication industry. Their proposals aim to streamline compliance, lessen tax burdens, and promote digital inclusion.

As more Pakistanis log in, there's a golden opportunity to reassess how policy can aid - rather than impede - digital adoption. With telecom usage taxes hovering around 34.5 percent, Pakistan stands among the most heavily taxed digital markets worldwide. High taxes exacerbate the digital divide, particularly for women and low-income users.

We must shift from taxing access to taxing value. Lowering entry barriers increases usage. And with increased usage comes documentation, transparency, and, ultimately, trust.

This isn't mere theory. Economic models like the Laffer Curve demonstrate that beyond a certain point, increasing tax rates lead to decreasing returns. In digital sectors, this applies even more clearly: smarter tax policy results in broader participation and solid long-term revenues.

At Jazz, we've experienced this firsthand. Originally a telecom company, we're now evolving into a multi-vertical ServiceCo. Through JazzCash, we processed PKR 9.4 trillion in 2024 - nearly 9 percent of Pakistan's GDP - serving over 20 million monthly users and more than 350,000 active merchants. We now offer local cloud and cybersecurity through Garaj and are venturing into healthtech and insurtech, utilizing digital tools to bring protection and care. If this transformation is possible for a company, it's certainly possible for a country.

But policy alignment is crucial. The telecom sector has suggested practical proposals: reducing the advance tax on usage, removing the 75 percent non-filer surcharge, rationalizing duties on essential equipment, and unifying sales tax at 15 percent across jurisdictions.

These aren't extravagant demands - they are sensible adjustments that make digital access more affordable, usage more likely, and revenue growth more enduring. Additionally, exempting the Telecom industry from withholding taxes and replacing them with a monthly advance tax contributions mechanism will bolster tax collections in field offices and avert unnecessary litigation resulting from onerous record validation by both telcos and tax authorities.

Pakistan already possesses the building blocks. RAAST, NADRA, and high mobile penetration are already in place. We've laid the tracks. Now we must ensure the policies running across them are designed for scalability, fairness, and durability.

At Jazz, we've witnessed how digital, when used intelligently, yields tangible results - from rural broadband to digital loans for women to inclusive AI. Our aim is not just to expand usage but to amplify impact.

Let's not complicate matters unnecessarily. Let's create a tax and policy environment that encourages growth, inclusivity, and national resilience. Let's reset the rules - and forge ahead together.

(The author is a member of OICCI's Managing Committee and the Chairman of the Telecom Operators Association of Pakistan. X: @aamir_ibrahim01)

Bonus Info:

Digital Services Tax (DST): Introduced in Pakistan in September 2021, it targets digital advertising, content, and platform services, aligning with global trends to address non-resident digital companies' selling across borders without local corporate income tax liability.
Global comparison: Digital Services Tax rates vary globally. For example, New Zealand introduced a 3% DST in January 2025, while countries like Kenya and Sierra Leone have rates of 1.5%. European countries like Italy and Germany have recently modified their VAT rates, with Germany moving art sales to a reduced 7% VAT rate.
Proposed changes in Pakistan: To promote digital inclusion and sustainable growth, several changes have been suggested in Pakistan, including reducing withholding tax on telecom services, encouraging the telecom sector's proposals to reduce advance tax on usage and remove non-filer surcharges.

Discoursing on the future of Pakistan, we should reassess our approach to taxes, moving from taxing access to taxing value, as this would lower entry barriers, encourage usage, and stimulate growth.
To foster a cashless economy and advance digital adoption, it's crucial to reassess tax policies on digital services, as high taxes currently exacerbate the digital divide, particularly for women and low-income users.
As technological advancements in finance (fintech) and decentralized finance (defi) continue to grow, adopting sensible tax reforms will aid Pakistan's economy, creating resilient systems that support overall growth and development.
In the face of severe economic challenges, embracing intelligent and inclusive digital landscapes offers potential solutions, provided we consider practical proposals such as reducing advance tax on usage, removing non-filer surcharges, and rationalizing duties on essential equipment to promote digital inclusion.

The era of tax impositions and trade barriers - a call for redefining the legislation