ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday agreed to reduce taxes on telecommunication sector and asked for negotiations with port terminal operators for reducing demurrage charges on Afghan cargo containers.

The ECC meeting, presided by Adviser to PM on Finance Dr Abdul Hafeez Shaikh, also approved the renewal of contract with TAVANIR Iran for the purchase of 104MW of electricity till December 31, subject to vetting by the Ministry of Law & Justice.

The ECC meeting, which was attended by only four members including just one minister — Shaikh Rasheed Ahmed — out of about a dozen, also allocated 38 million cubic feet per day from three new wells Rehman 6, 7 and 8 in Sindh to the Sui Southern Gas Company Ltd, subject to regulatory approvals. The gas will be provided as per availability in the winter months.

The ECC members who attended the meeting included advisers to prime minister on commerce and institutional reforms & austerity. Special assistants to PM on petroleum and revenue also attended the meeting.

In order to facilitate the telecom sector, the ECC approved in principle a request for waiver and reduction in rates of certain taxes. The sources said Dr Shaikh said that now that coronavirus appeared to be continuing and large number of people had to be reliant on broadband and other telecom services, the government would facilitate the people and businesses to help them stay connected and operate businesses without physical movement as much as possible.

A sub-committee constituted by the ECC about two months ago had advocated, on the demand of the telecom companies, to completely abolish taxes which were adjustable as they created cash flow problems and unnecessary documentation while other taxes be reduced by two to five per cent.

At present general sales tax is applicable on telecom services at the rate of 19.5pc besides advance income tax at 12.5pc on most of the telecom services including voice, SMS and MMS services besides withholding taxes etc. The revenue impact of just one tax was estimated at about Rs52bn but it was argued that it was mostly adjustable. There are also duties on import of certain items and equipment used in telecom companies besides additional customs duties etc. There is also a charge on issuance of new connections.

The ECC constituted another subcommittee comprising SAPM on revenue, adviser to PM on institutional reforms & austerity, minister for industries & production and adviser commerce, to prepare a modified proposal in view of the Federal Board of Revenue’s response for final approval.

The Ministry of Maritime Affairs presented a summary for the waiver of demurrage charges on Afghan Transit Cargo/Afghan-bound containers stranded at Karachi ports.

Earlier, the government had asked the terminal operators to waive off 75pc of the demurrage charges on Afghan Transit containers/cargo landing at ports from March 22 to Sept 30 (Covid-19 period) including refund of demurrage charges already recovered from such importers of Afghan-bound transit container/cargoes. The total estimated charges stood at about Rs16bn of the container owners had offered to pay about Rs4bn and wanted waiver of remaining Rs12bn.

Published in Dawn, October 29th, 2020