Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial on Sunday assured a parliamentary panel that the government would review a reduction in the 20 per cent regulatory duty on imported mobile phones, particularly for handsets priced up to $200. The assurance came during a meeting of the National Assembly Standing Committee on Finance, chaired by Syed Naveed Qamar, which also approved proposals to impose higher customs and special excise duties on imported hybrid, electric, and luxury vehicles.
Current Tax Structure for Imported Mobile Phones
FBR officials briefed the committee on the existing tax rates for imported mobile phones. Phones priced up to $30 currently attract a 25 per cent effective tax rate, while handsets valued between $31 and $100 are taxed at 36 per cent. Imported phones priced between $101 and $200 face an effective tax rate of 40 per cent, those worth $201 to $350 are taxed at 38 per cent, smartphones priced between $351 and $500 attract a 40 per cent tax, and phones costing more than $500 face an effective tax rate of 41 per cent.
Officials explained that the tax burden rises with the value of the handset, with per-unit taxes ranging from Rs1,500 to as much as Rs141,500. They added that 44 per cent of imported mobile phones fall within the $31 to $100 category, while the average effective tax rate across all imported phone categories stands at 39.6 per cent.
Committee Proposes Instalment Payment Mechanism
During the meeting, committee members pointed out that millions of non-PTA-approved mobile phones were currently in use across the country. They proposed introducing an instalment-based payment mechanism for mobile phone taxes, arguing that instalment facilities were available globally even for low-value consumer goods. The committee chairman directed the FBR and the Pakistan Telecommunication Authority (PTA) to jointly prepare a workable proposal for introducing an instalment payment system.
Concerns Over High Taxes
Committee member Hina Rabbani Khar questioned whether the high taxes on mobile phones were intended purely to raise revenue or to protect a particular company. She said consumers should not have to bear such a heavy financial burden when purchasing mobile phones. Her remarks highlighted the ongoing debate between revenue generation and consumer protection.
Higher Duties on Hybrid, Electric, and Luxury Vehicles
The committee also approved proposals to impose higher customs and special excise duties on imported hybrid, electric, and luxury vehicles. This move is aimed at increasing government revenue and potentially discouraging the import of high-end vehicles. The exact rates and implementation details were not disclosed during the meeting.
Impact on Consumers and Market
The proposed review of regulatory duty on mobile phones could lead to lower prices for handsets under $200, benefiting a large segment of consumers. However, the higher duties on luxury vehicles are expected to increase their cost, potentially reducing demand. The instalment payment mechanism for mobile phone taxes, if implemented, could ease the financial burden on consumers and encourage compliance.
