Pakistan’s mobile phone market is in for a shakeup as the government implements a new tax structure. This overhaul aims to simplify the system and increase revenue collection.
Previously, fixed tax rates on imported phone assembly kits depended on the phone’s price. This complexity is gone, replaced by a new system with a fixed rate per kit, ranging from Rs. 70 to Rs. 5,200 depending on value.
Another key change is a uniform 18% sales tax applied to both imported kits and locally supplied mobile devices, eliminating any potential inconsistencies in sales tax rates.
However, high-end phone users will face an additional tax burden. Completely built-up (CBU) smartphones exceeding $500 will be subject to a steeper 25% sales tax. It’s important to note that this higher tax only applies to fully assembled phones, not those that are yet to be assembled or partially assembled.
The government expects these changes to simplify the tax system for businesses and generate an additional Rs. 33 billion in revenue during the current fiscal year. However, consumers, particularly those looking to buy expensive phones, might see price increases due to the new tax structure.
