Rs. 1,000 Tax Imposed On Import of Every Cell Phone in Pakistan

Federal Board of Revenue has imposed a tax of Rs. 1,000 on every smartphone import and Rs. 500 on every feature phone that will be imported into the country.

An SRO issued by FBR said that “Government is pleased to direct” to charge sales tax on cell phones as following:

• Rs. 1,000 per cellular mobile phone in case of a smart phone or Satellite phone, where the term smart phone means a cellular mobile phone having following characteristics:
  • 4GB or higher basic memory
  • Touch screen
  • Dual core or higher processor
  • 5 Megapixel or higher camera
  • iOS, Android version 2.3, Android Gingerbird or higher, Blackberry, Windows 8 phones or higher
• Rs. 500 per cell phone in case other than smart phone or satellite phone

Here is the copy of original SRO issued by FBR:

Under these directions, every phone – which is a touch screen or has a 5MP camera or above – will be charged at a tax rate of Rs. 1,000.

Estimates suggest that FBR is likely to make Rs. 5 billion per annum with this new tax. It merits mentioning here that FBR is short of annual tax collection target of Rs 2.381 trillion and this is probably why it is unfolding every possible avenue to get its target.

Market sources say that even the cheapest cell phones – those imported from China – will come under the tax net and prices for a Rs. 2,000 phone will go up to Rs. 3,000 to 3,500 on average.

The step is likely to increase the cell phone prices in Pakistan by Rs. 1,500 to Rs. 2,000 and those who had stocks available with them are going to make several billions of rupees after this decision. The whole burden is to be endured by the end users of telecom sector who are already paying highest tax rates amongst all sectors.

Increase in tax is also going to promote illegal channels of bringing cell phones into the country, hurting the revenues of main stream mobile phone manufacturers such as Nokia and Samsung.

Commerce bodies and importers have already protested the decision and have demanded the government to withdraw the SRO.

It maybe recalled that government of Pakistan had imposed Rs. 500 sales tax on every imported phone, which was latter cut to Rs. 250 per phone amid industry demands.