Federal Minister for Information Technology and Telecommunication Shaza Fatima Khawaja has told the Senate Standing Committee on Cabinet Secretariat that the Tax Policy Office will be asked to consider reducing taxes on older mobile phones. The committee discussed mobile phone taxes during a meeting that was attended by officials from the Ministry of IT and Telecommunication, the Pakistan Telecommunication Authority (PTA) and the Federal Board of Revenue (FBR). Shaza Fatima said that the Tax Policy Office should brief the committee on possible tax adjustments for older handsets. She explained that any decision on further tax relief for older smartphones falls under the Tax Policy Office of the Ministry of Finance, which is the reason why the matter has been referred to it.
The minister told the committee that around 93 percent of the mobile phones that are used in Pakistan are manufactured locally, and that imported phones account for a relatively small share of the market, which she used to highlight the role of domestic manufacturing in meeting demand. FBR officials told the committee that the model and the storage capacity of a mobile phone are factors in the calculation of taxes, while PTA officials said that the PTA system does not identify the models of phones, which creates a challenge in assessing taxes. A PTA member urged the FBR to reduce mobile phone taxes and suggested that minimum duties be calculated on the basis of the model of a smartphone rather than its storage capacity.
The Cabinet Division secretary reminded the PTA representative that taxation policy does not fall within the jurisdiction of the authority. He also called for lower taxes on locally assembled mobile phones, while supporting taxation on high end devices, and he called for additional tax relief on used smartphones. The discussion also covered the effect of mobile phone taxes on consumers and on access to newer technology. Shaza Fatima said that the import of 5G smartphones is not an issue, and that the taxes of the FBR are not affecting the adoption of 5G technology.
She added that the Prime Minister has directed the government to formulate a policy that allows consumers to buy mobile phones through easy installments. No immediate reduction in mobile phone taxes has been approved, and the committee has given the authorities one month to review the issue. It will examine the subject again after it has received the relevant input from government departments, which means that the next step is the briefing of the Tax Policy Office on the possible adjustments for older handsets. Until that briefing takes place, the current taxes on mobile phones remain in force.
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