The cost of imported mobile phones is set to rise starting July 1, 2024, as duties and taxes on their commercial import are slated to increase in the upcoming fiscal year 2024-25 budget.
Sources indicate that the Federal Board of Revenue (FBR) has proposed the implementation of a federal excise duty (FED) on mobile phones, along with an augmented assessment of FED on imported handsets, with particular emphasis on elevating the PTA tax on high-end phones.
Read more: Mobile Phone Price Plunge in Pakistan
Presently, imported mobile phones are subject to a General Sales Tax (GST) rate of up to 25 percent, but the forthcoming Finance Bill seeks to escalate this rate further. This proposal aims to bolster the federal government’s tax revenue by at least Rs. 2 trillion in the next fiscal year.
Currently, sales tax is levied on Completely Built Units (CBUs) upon import or registration (IMEI number by CMOs). Additionally, sales tax is imposed on imports in Completely Knocked Down/Semi Knocked Down (CKD/SKD) condition and on the supply of locally manufactured mobile phones in CBU condition.
The proposal entails hiking duties and taxes on the import of cellular phones, as well as on CKD/SKD condition and their components in the upcoming budget.
The private sector has urged the government to completely abolish the advance tax rate on telecom subscribers, citing that a significant portion of the subscriber base falls below the taxable threshold, thereby affecting mobile service affordability.
Furthermore, in its taxation recommendations for the 2024-25 budget, the OICCI proposed an overhaul of the withholding tax regime to enhance transparency in tax claims and verification mechanisms with minimal operational complexities.
However, the Finance (Supplementary) Act of 2021 saw the withholding tax rate increase from 10 percent to 15 percent, impacting the affordability of mobile services, which are critical for the majority of Pakistan’s population living below the poverty line. Access to telecom services is also pivotal for the country’s economic development.
