A new research has found that high taxes on mobile phones in Pakistan and Bangladesh are limiting their digital economies.
The research,titled “Unlocking Digital Growth by Reducing Sector Taxation in Bangladesh and Pakistan”, has been conducted by Frontier Economics for VEON Ltd, a global digital operator.
The report underscores the critical role of mobile industry tax rationalisation can do for the expansion of digital economy in Pakistan and Bangladesh.
Pakistan and Bangladesh levy taxes on mobile phones which are among the highest in the world with Bangladesh at 47% and Pakistan at 37%. The research reveals that reducing combined sales and turnover taxes on mobile services from 47% to 23% in Bangladesh and from 37% to 17% in Pakistan could increase mobile penetration and usage, accelerate GDP per capita growth.
It also found that initial reduction in tax revenues would lead to broader economic growth.
Mobile connectivity is a critical enabler of financial inclusion in both countries, where mobile money platfroms are transforming access to financial services. “This independent research demonstrates that reducing excessive sector-specific mobile taxes can unlock substantial economic benefits, expand government revenues over the medium term, and support the digital transformation goals of both countries,” said Clive Kenny, Senior Principal at Frontier Economics.
