ISLAMABAD – The federal government is planning major tax relief measures for Pakistan’s telecom and broadband sector in the upcoming FY2026-27 budget to promote digital connectivity and support preparations for the future rollout of 5G services in the country.
The informed sources said that the policymakers are reviewing a proposal to substantially reduce import duties and taxes on fiber optic cables.
Under the proposal, the existing cumulative tax and duty structure of nearly 60 percent could be reduced to around five percent to encourage telecom operators and internet service providers to rapidly expand Fiber-to-the-Site (FTTS) infrastructure nationwide.
Sources said the government is also examining options to lower taxes imposed on internet services in an effort to make broadband more affordable for consumers and increase internet penetration under the broader Digital Pakistan initiative.
Currently, internet users are paying around 19.5 percent in provincial taxes in addition to a 12.5 percent federal withholding tax, significantly increasing the cost of broadband services for consumers.
Industry stakeholders have repeatedly expressed concerns that the prevailing tax regime on telecom infrastructure and internet services has slowed broadband expansion and restricted digital inclusion, especially in rural and underserved areas of the country.
Officials said the proposed reduction in duties on fiber optic cable imports is aimed at lowering infrastructure deployment costs and accelerating the fiberisation process, which is considered essential for the successful launch of next-generation 5G technology in Pakistan.
Telecom experts believe that without large-scale expansion of fiber networks, the country may face difficulties in fully utilising the commercial and technological potential of 5G connectivity.
Sources familiar with the ongoing budget consultations said easing the tax burden on digital services is also being considered to encourage internet adoption, support the growth of Pakistan’s IT and freelancing sectors, and improve access to affordable high-speed internet.
A senior official involved in the discussions said the government considers affordable broadband and modern digital infrastructure crucial for economic growth and future competitiveness, adding that final decisions would be taken during the FY2026-27 budget deliberations.
Meanwhile, Wireless and Internet Service Providers Association of Pakistan Chairman Shahzad Arshad welcomed the proposed measures, calling them a positive development for Pakistan’s telecom and internet industry.
He said that reducing import duties on fiber optic cables and lowering internet taxation would help accelerate broadband expansion, improve affordability for consumers, attract fresh investment in digital infrastructure, and strengthen the foundation for future 5G services across the country.
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