Pakistanis might be shelling out more for their mobile phones soon. The government is considering raising import duties and taxes on phones in the upcoming budget (FY 2024-25), according to ProPakistani.
This move could significantly impact affordability in a country where a large portion of the population lives below the poverty line. Sources claim the Federal Board of Revenue (FBR) is proposing a multi-pronged approach to increase tax revenue by Rs. 2 trillion next year. This could include implementing a new federal excise duty (FED) on mobile phones, along with a more comprehensive assessment of existing FED on imported handsets. Additionally, the proposal suggests raising the Pakistan Telecommunication Authority (PTA) tax on high-end phones.
Currently, imported phones are subject to a General Sales Tax (GST) of up to 25%. The proposed changes, potentially including a GST increase, have raised concerns about affordability. These measures would not only affect finished imported phones (CBU) but also parts used for local assembly (CKD/SKD).
The private sector has voiced its concerns and proposed alternative measures to ease the burden on consumers. One suggestion involves abolishing the advance tax on telecom subscribers, arguing that most users fall below the taxable limit and this tax makes mobile services less affordable. Additionally, industry groups like the Overseas Investors Chamber of Commerce and Industry (OICCI) have called for a revamp of the withholding tax regime, aiming for a more transparent and user-friendly system.
They emphasize that affordable mobile services are crucial not only for individual users but also for the country’s economic growth. With a large portion of the population living below the poverty line, increased taxes on mobile phones could create a barrier to essential communication and economic participation.
The government’s final decision on import duties and taxes will determine the impact on mobile phone prices and accessibility in Pakistan.
