ISLAMABAD: The Federal Board of Revenue (FBR) will seek approval from the cabinet to legalise smuggled inactive phones on a payment of duty, a senior tax official told Dawn on Thursday.

The tax machinery estimates that import of illegal phones in the market causes heavy revenue losses to the federal exchequer annually.

“We will submit the summary in the next cabinet meeting,” the official said requesting anonymity.

As per the proposed plan, the tax authority has worked out a plan to tax all those smuggled phones which are currently inactive and still in shops as unsold stock.

A cut-off date within the range of one to one and half months will be announced for owners of such phones for availing the scheme to legalise it, the official said.

Past the deadline, the official said, all those phones will become redundant on which duties are not paid at the nearest customs point.

Such phone sets, either smuggled before the deadline, or after that, will not be activated.

However, phone sets currently in use whether legally imported or smuggled will be exempted from the payment of duty.

The payment of duty on smuggled phone will depend upon the category they belonged to.

In 2017-18, Pakistan’s legal imports value of mobile phones reached $847.656 million in 2017-18.

Earlier, the imports had crossed the $1bn mark when there was no duty under the free trade agreement with China, or a very negligible duty applicable from other countries. The government has recently revised the duty structure and imposed regulatory duty on imports of mobile phones.

Consequently, the legal imports have started declining, mainly because of a rise in smuggling of mobile phones.

In May, the Pakistan Tele­communi­cations Authority (PTA) launched the Device Identification, Registration and Blocking System (DIRBS) mechanism to counter the spread of substandard and used phones being smuggled into the country.

The used and refurbished mobile phones are being smuggled into the country using different channels.

According to the PTA, nearly 160m compliant and non-compliant mobile devices were active on all the networks before the launch of DIRBS.

Currently, the FBR has notified new rates of regulatory duties on import of new mobile sets. The rate of regulatory duty is Rs250 per mobile set worth less than $60.

The rate of regulatory duty is 10pc of the value of mobile phone if its value ranges between $60-130. The rate of regulatory duty will be 20pc of the value if it is more than $130 per set.

The unregistered mobile phones will be those devices that are not registered with the Global System for Mobile Association.

Published in Dawn, November 23rd, 2018