The Ministry of Information Technology and Telecommunication has
opposed the Federal Board of Revenue’s (FBR) taxation on mobile phone
import under Baggage Rules and recommended reduction in duties on
smartphones to achieve the digital vision of the government.
Official sources revealed that a meeting was held in the Ministry of
IT & Telecom where, besides the Federal Board of Revenue (FBR),
other stakeholders also participated and discussed mobile phone import
under the Baggage Rules.
The MoITT confronted FBR on taxes on mobile phone imports, saying
that it is negatively affecting the IT sector as well as the digital
agenda of the government.
FBR had removed duty-free import of phones after reported misuse and
information that expensive mobile devices were mostly being registered
by using international passengers’ data. Furthermore, the government
desired that there should be uniformity in the application of taxes
whether brought into Pakistan by passengers or locally procured and,
therefore, the exemption was withdrawn to avoid this anomaly. The FBR
official said that around Rs 10 billion has been collected from taxes on
mobile imports.
However, no final decision was reached on reviewing taxation and allowing duty free import of mobile phones.
A senior official of the IT Ministry said that if a sector could
contribute to the national economy in services and exports, it is the IT
sector. He said that if mobile phone manufacturing plants are not
available, it is not feasible to import mobile phones with such taxes
and duties. He added that the matter had been taken up with the FBR.
Presidents/chief executive officers (CEOs) of the telecom companies,
Federal Board of Revenue (FBR) and Ministry of Information Technology
also submitted their viewpoints on taxation of mobile phones and
allowing duty-free import of mobile phones, on December 24, at a meeting
held at the Ministry of IT, however, no decision was taken in this
regard.
Chairman FBR Shabbar Zaidi had said before different parliamentary
panels that recommendations for allowing duty-free import of mobile
phones under Baggage Rules would be tabled before the Economic
Coordination Committee (ECC) of the Cabinet. Baggage Rules were misused
in the past, compelling the government to withdraw the facility.
CEOs of four telecom companies collectively informed Abdul Hafeez
Shaikh, Advisor to the PM on Finance, about the taxation on import of
mobile devices and smartphones. The companies recommended retention of
the current tax structure on low-end 2G handsets/feature phones (i.e.
Rs. 500 as tax per device); reduction in tax/duty on 3G/4G handsets
(smartphones) below Rs. 10,000 and cap it to a maximum of Rs 1,000 per
device and reduction in tax on smartphones in the higher price brackets
and cap it to a maximum of Rs 5,000 per device.
They further informed that a tax regime that focused only on the
short-term gains is going to negatively impact the uptake of the
Internet of Things (IoT) ecosystem in the country including
smartwatches, sensors, smart metering, smart cities and other upcoming
machine-to-machine (M2M) systems. This shall also impact the
government’s efforts to introduce 5G in the future.
Pakistan imported mobile phones worth $498.5 million during
July-November (2019-20) as compared to the import of $304.7 million
during July-November (2018-19), showing a growth of 63.62 percent,
according to the latest data issued by Pakistan Bureau of Statistics
(PBS).
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