ISLAMABAD

Pakistan is preparing major tax relief measures for the telecom and broadband sector in the upcoming FY2026-27 budget, as the government moves to accelerate digital adoption, expand internet access and support the country’s growing IT and freelancing economy.

According to reports, policymakers are considering reducing taxes on internet services and sharply lowering import duties on fiber optic cables in a bid to make broadband more affordable and improve nationwide connectivity.

Currently, internet users in Pakistan face a combined burden of provincial and federal taxes on broadband services, contributing to high connectivity costs for households, freelancers, startups and small businesses. Officials believe lower taxes could boost internet penetration and strengthen Pakistan’s digital economy.

The proposed reforms are also aimed at supporting the expansion of 4G and future 5G infrastructure, with telecom operators seeking reduced taxes on mobile services, fiber imports and next-generation telecom equipment.

Industry representatives have argued that Pakistan’s telecom sector remains under financial pressure due to high taxation, rising operational costs, currency depreciation and expensive infrastructure deployment requirements.

The telecom industry has proposed reducing duties on optic fiber imports from nearly 67% to 5%, warning that high deployment costs and global supply shortages are slowing broadband expansion, particularly in rural and underserved areas.

Operators have also urged the government to abolish customs duties on 5G equipment, smartphones, servers, batteries and telecom infrastructure components, saying the move could unlock billions of rupees in additional investment for network expansion.

The planned reforms come as Pakistan intensifies efforts to modernize its digital infrastructure. Earlier this year, the Pakistan Telecommunication Authority raised more than $500 million through a nationwide 5G spectrum auction aimed at improving broadband capacity and preparing for next-generation mobile services.

Government officials say cheaper internet access is increasingly critical for Pakistan’s IT exports, freelancing industry and broader digital transformation agenda under initiatives such as the Digital Nation Pakistan framework.

Analysts say affordable broadband and improved fiber infrastructure could help accelerate financial inclusion, e-commerce growth, digital payments and online education across the country, particularly in smaller cities and remote regions.