Tax slabs on mobile handsets revised

Updated June 15, 2019

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The fixed rate on import of mobile phones with a price of up to $30 will now be charged a flat rate of Rs360. — AFP/File
The fixed rate on import of mobile phones with a price of up to $30 will now be charged a flat rate of Rs360. — AFP/File

ISLAMABAD: The government has enhanced flat tax rates on mobile phones in the budget 2019-20 for six different slabs as per the import value in a move to lower tax on cheaper handsets compared to those having higher prices.

Finance Supplementary (Second Amendment) Bill, 2019 had merged all four taxes --- regulatory duty, sales tax, withholding tax and mobile levy into a single fixed rate to facilitate import of mobile phones effective from March 12.

The fixed rate on import of mobile phones with a price of up to $30 will now be charged a flat rate of Rs360 up from Rs180 per set, while it will be charged at the rate of Rs36,900 per set as against the current Rs18,500 on import of mobile phones valuing more than $500 per set.

Before March, the total impact of taxes at import stage on mobile phones valuing up to $60 was Rs250 per set, while it was 10 per cent and 20pc of the import value for those falling in a price range of $60-130 and those valuing more than $130, respectively.

Government believes the changes in the flat rates will help achieve maximum collection from imports besides facilitating fair assessment of mobile phones at import stage.

The government had introduced strict regime for mobile-phones after reports surfaced regarding sale of mobile phones in the market brought in to the country through duty-free and passenger baggage.

As per the proposed enhancement in fixed rates, mobile phones having an import value between $30-100 will be charged at the rate of Rs3,600 as against the existing Rs1,800 per set, while the fixed rate on import of sets valuing between $100-200 will be Rs5,400 as against the existing Rs2,700 per set.

For phones will import value of less that $530 per set but more than $200 will be charged a fixed rate of Rs7,200 per set against the existing regulatory duty of Rs3,600.

Moreover, for handsets valued above $350-500, the duty will be charged at a flat rate of Rs20,700 as against the existing Rs10,500 per set, while the regulatory duty will now be Rs36,900 as against the existing rate of Rs18,500 per set if a mobile phone has import value of more than $500.

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

Earlier, when there was no duty under a free trade agreement with China, or a very negligible duty applicable from other countries, the imports had crossed the $1 billion mark.

After the government revised the duty structure and imposed regulatory duty on import of mobile phones, total legal imports dropped whereas smuggled imports have increased.

Earlier in May 2018, the Pakistan Telecommunica­tion Authority had launched the Device Identification, Registration and Blocking System mechanism to counter rampant smuggling of substandard and used phones into the country.

To encourage local assembling, government rationalised regulatory duty on mobile phone kits and parts.

At present, mobile phone in CKD/SKD condition are subjected to regulatory duty at specific rates depending upon the value per kit.

However, no regulatory duty is levied on mobile phone parts. Mobile phone manufacturers are importing CKD and SKD kits of mobile phone in separate consignments and declare them as mobile phone parts to avoid regulatory duty.

In order to encourage local assembling of mobile phones, the existing regulatory duty on kits was removed and imposed a uniform rate of 5pc on both kits and parts alike.

Published in Dawn, June 15th, 2019