A new analysis prepared for VEON by Frontier Economics suggests that Pakistan could eventually increase its overall tax collection by reducing heavy taxation on mobile services.

The report notes that lowering mobile-sector taxes would initially reduce direct telecom revenues, but the impact could be offset over time as improved connectivity boosts economic activity and widens the tax base.

It models a scenario where the total tax burden on mobile services falls from 37% to 17%, including reductions in sales tax, regulatory duty, and the removal of advance income tax on users.

Under this framework, the government would face a short-term revenue gap of about $439 million. However, researchers say this represents a small share of total tax receipts and could be recovered as digital usage expands.

The study projects higher mobile adoption and data consumption, alongside stronger economic growth, with GDP per capita growth rising modestly from 4.2% to 4.5%.

By 2031, the report estimates that overall fiscal gains could begin to exceed losses, strengthening the case for treating mobile connectivity as a growth driver rather than just a tax base.