Pakistan’s new budget, effective for the 2024-25 fiscal year, implements a higher sales tax on imported high-end smartphones. According to the finance bill, a 25% sales tax will now be applied to imported smartphones exceeding $500 in value. This tax increase targets premium and flagship devices.
The 25% rate is crucial to note, as it only applies to fully assembled smartphones exceeding the $500 threshold. Partially assembled or unassembled imported handsets will continue to be taxed at a lower 18% rate, regardless of their value. The same 18% rate will hold true for locally manufactured and supplied smartphones.
For budget-friendly and mid-range smartphones valued below $500, the government maintains a flat 18% sales tax across the board. This applies to fully assembled, partially assembled, and completely unassembled imported devices, as well as locally produced phones. As previously reported, this revised tax structure is expected to generate an additional Rs. 33 billion (approximately $193 million USD) in revenue for the government.
The move to increase taxes on high-end smartphones could potentially impact consumer purchasing decisions and potentially influence the market share of premium phone brands in Pakistan.
