Pakistanis hoping for relief on mobile phone taxes in the upcoming federal budget are likely to be disappointed, as a much-discussed proposal to reduce PTA tax rates on high-end imported smartphones from 25 percent to 18 percent appears set to be shelved for another year. Under the current PTA tax structure, mobile phones imported from abroad or brought in by overseas Pakistanis remain functional only for a limited period unless applicable taxes are paid, with high-end smartphones priced above $500 currently taxed at around 25 percent. The proposed revision suggested lowering the tax rate across the board to 18 percent to provide relief, particularly for Pakistani citizens visiting from abroad, but the proposal is unlikely to be implemented this year.
The issue had gained significant traction in recent weeks following discussions at the National Assembly Standing Committee on Finance, where members directed the Federal Board of Revenue and Tax Policy Unit to examine rationalisation of duties and taxes on imported mobile phones as part of the budget 2026-27 process. Minister for Parliamentary Affairs Dr Tariq Fazal Chaudhry had also told the Senate that the government was seriously considering proposals to provide relief in PTA mobile phone taxes for overseas Pakistanis, noting that expatriates had repeatedly raised the issue at overseas conventions held in Pakistan. Despite that momentum, fiscal realities appear to have overtaken the reform conversation as the budget deadline approaches.
If approved, the measure could negatively impact local mobile assemblers such as Airlink and LMC, which benefit from the existing tax structure that discourages fully imported devices. The proposed reduction aimed to align mobile phone taxes closer to the standard 18 percent sales tax, offering relief to overseas Pakistanis and local consumers who rely on imported handsets, but fiscal constraints and broader budget priorities have made approval of the proposal unlikely this year. Analysts note that lowering PTA taxes could also disrupt the local mobile assembly industry, which has expanded rapidly under the current policy framework. The dual concern of revenue loss and damage to a growing domestic industry has made policymakers reluctant to move on the proposal in the short term.
In a separate policy discussion, tax harmonisation across the information technology and digital workforce has also been considered. The issue stems from disparities between salaried employees, who face tax rates of roughly 5 to 20 percent, and freelancers or remote workers, who are taxed at significantly lower effective rates of around 0.25 to 1 percent. Proposals under review include either reducing taxes on employees working in export-oriented IT companies or increasing the tax burden on freelancers to create parity in the system. However, policymakers are also said to be reluctant to disrupt the rapidly growing freelance and IT export ecosystem. According to Topline Securities, both proposals are expected to face resistance when the federal budget is announced.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
