Budget 2026-27: Mobile, internet package rates likely to decrease in Pakistan

ISLALMABAD – An international economic research body, Frontier Economics, has recommended significant reductions in taxes on mobile phone services in Pakistan ahead of Budget 2026-27. In its report, it stated that the current tax burden is hindering digital growth. If the recommendations are approved by the government, the mobile phone and internet packages may see a decline in charges. The organization suggested reducing the overall sales and turnover tax on mobile services from 37 percent to 17 percent. It also recommended abolishing the 15 percent advance income tax charged from consumers and lowering the regulatory duty from 2.5 percent to 1 percent. The report further proposed cutting the general sales tax on mobile services from 19.5 percent to 16 percent. According to Frontier Economics, Pakistan is among the countries with the highest taxation on mobile services. It noted that multiple layers of taxation, including sales tax, advance income tax, regulatory duty, and corporate levies, place a heavy burden on the sector. The report added that mobile companies in Pakistan also face a 29 percent corporate tax along with an additional 10 percent super tax on profits. It argued that reducing sector-specific taxes and aligning them with other industries could help accelerate digitalization, financial inclusion, and overall economic growth. Frontier Economics estimated that the proposed reforms could increase mobile operators’ revenues by around 6.4 percent while also boosting mobile usage and data consumption. The report also stated that a 1 percent increase in mobile usage could raise per capita GDP growth by approximately 0.115 percentage points. It suggested that Pakistan’s GDP growth rate could rise from 4.2 percent to 4.5 percent with tax reductions. The think tank recommended removing additional charges on mobile services, SIM cards, and access fees, and integrating tax reforms into Pakistan’s broader digital transformation strategy.