Importing a mobile phone has become 86% cheaper as the FBR slashes import duties. But it’s only for phones that cost $100 or less.
The sales tax on importing mobile phones that cost up to $100 has been reduced from Rs1,320 to Rs200. The FBR is amending its tax laws with effect from December 28, 2019.
Mobile phones worth less than $100 will be charged withholding tax of Rs200. People buying phones in this slab were previously paying Rs750 in duties.
The import volume of mobile phones halfway through the 2019-20 financial year (July to November 2019) was recorded at $391 million while last year’s imports for the same time period were $248 million. This means imports increased by 58%.
Heavier duties were imposed last May to increase the volume of tax collected on luxury imports.
However the Senate Standing Committee on Information Technology advised the FBR to slash duties as they did not mesh well with the vision of digitising Pakistan.
In September, the FBR had proposed cuts in the Customs regulatory duties of mobile phone imports in order to encourage digitisation and the “provision of relief to the common man”.
“This reduction in duty/tax is expected to increase import volume of mobiles in Pakistan,” read a notfication by the FBR.
In a move to digitize Pakistan, the ministry of commerce and the ministry of IT have collectively worked out a proposal for revised sales tax rates and regulatory duties on the import of mobile devices, an FBR official told SAMAA Digital.
“The proposal is under debate and at least one meeting has been held between the stakeholders.”
The official said this proposal has “drawn the ire of the local manufacturers,” as the projected slash in exorbitant duties on expensive phones will affect the sales of local products.
“It is expected that after another meeting with stakeholders, a unanimous agreement on the tax cuts will be reached,” he added.
Sales and withholding taxes on phones that cost above $100 remain unchanged for now and the revision in the regulatory duties on the import of phones at Customs is in the pipeline
The FBR chairperson announced that the board collected over 16% more tax by the end of the second quarter of FY20, than it did last year. The total taxed amount collected was Rs2.08 trillion.
“Alhumdulillah, the FBR has collected Rs2,080 billion by this time for the half year ended December 31, 2019. This is higher by 16% over last year for the same period,” read a tweet from FBR Chairman Shabbar Zaidi.
However the revised tax collection target for the first half of the fiscal year was Rs2198 billion, already decreased from the original target of Rs2,367 billion. Which means the FBR collected Rs118 billion less than it was expected to in spite of the considerable revision.