ISLAMABAD – Pakistani government is considering all out options to increase revenue and now imported mobile phones are expected to increase starting July 1, 2024, due to increased duties and taxes on their commercial import.
Reports in local media claimed that Federal Board of Revenue (FBR) proposed implementing a federal excise duty (FED) on imported mobile phones. This includes a comprehensive assessment of FED on imported handsets, with a particular emphasis on raising the PTA tax on expensive phones.
As of now, imported mobile phones are subjected to General Sales Tax (GST) rate of up to 25 percent. However, the forthcoming Finance Bill proposes to increase this rate further. This initiative is part of the federal government’s broader effort to boost tax revenue by at least Rs. 2 trillion in the next fiscal year.
Sales tax is currently applied to Completely Built Units (CBUs) at time of import or registration (IMEI number by CMOs). It also applies to imports in Completely Knocked Down (CKD) and Semi-Knocked Down (SKD) conditions and the supply of locally manufactured mobile phones in CBU condition.
The proposal further aims to increase duties and taxes on import of cellular phones, CKD/SKD conditions, and their parts in the forthcoming budget.
Despite government’s rhetoric to increase taxes, private sector suggested that government should completely abolish the advance tax rate on telecom subscribers, as most subscribers fall below the taxable limit, which hampers the affordability of mobile services.
In its taxation proposals for 2024-25 budget, the Overseas Investors Chamber of Commerce and Industry (OICCI) recommended the government revamp the withholding tax regime to make tax claims and verification mechanisms more transparent with minimal operational difficulties.
The withholding tax rate was jacked up from 10 percent to 15 percent, and this increased tax rate impacts the affordability of mobile services.
