FBR moves to slash duties on import of mobile phones
KARACHI: The Federal Board of Revenue (FBR) has proposed to slash regulatory duty (RD) on import of mobile phones by up to 50 per cent in some cases, saying the move is aimed to “provide relief to the common man and to support digitisation endeavours.”
The move is expected to have no impact in overall collection of duties under this head, since the FBR believes it will lead to higher volume of imports.
“This reduction in duty/tax is expected to increase import volume of mobiles in Pakistan,” the summary, which carries the signature of FBR Chairman Shabbar Zaidi, says. This may “to some extent, neutralise the otherwise negative impact of this measure.”
Duties and taxes on mobile phones were reduced in the last budget announced in May.
Changes also proposed on duties on used clothes and polyester fibre
The sharpest reduction in RD will be on mobile handsets with a cost and freight value between $100 and $200, where the existing RD rate is Rs2,430 that the FBR is proposing to bring down to Rs1,200 [see table for full detail].
The proposal will reduce the price of mobile handsets in the market, but could also provide a disincentive for local assembly, say businesspersons who are in advanced stages of setting up local mobile phone assembly plants in the country. “This will effectively kill smartphone local assembling feasibility,” one such businessperson, who did not wish to be named, told Dawn when reached for comment.
Industry sources tell Dawn that a mobile phone manufacturing policy is being finalised by the Adviser to PM on Commerce Razak Dawood in collaboration with the Engineering Development Board. Assembly of mobile phones is one of the industries that is potentially being moved out of China, providing opportunities for other countries to attract investment in the sector.
In addition, the same summary also proposes to eliminate the RD imposed on “worn clothing and other worn articles”, arguing that “these clothing articles are used by low income people”. At the moment, worn clothing and articles are subject to 10pc RD.
Polyester filament yarn (PFY), an important input in the country’s textile industry, including in exports, had seen their duties reduced from 5pc to 2.5pc in a supplementary budget last fiscal year.
In the last budget for FY2020, this was further reduced to zero. But now, the FBR has had a change of heart, keeping the interests of the local PFY manufacturing sector in mind.
“As the local industry of PFY manufacturing is expanding its capacity, the Commerce Division has now recommended levy of 2.5pc RD” on the four tariff lines that are applicable to import of PFY.
“Therefore, it is proposed that in order to support the domestic industry in expansion of its capacity, RD rate may be rationalised at 2.5pc on import of PFY, falling under five Pakistan Customs Tariff codes .... uniformly to avoid misdeclaration at import stage,” the summary says.
Approval of Finance Adviser Hafeez Shaikh will be required for both proposals, following which the summary will be moved to the cabinet.
Published in Dawn, September 15th, 2019
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Comments (30) Closed
And what about flight of dollars resulting from this measure, and the obvious disincentive for local assembly? Particularly considering that 30-200$ worth phone are what we can realistically expect to make here and not flagships.
Without doing any homework regarding putting heavy taxation on the above item,gradually realizing that they are not getting revenue as desired rather getting less now they are trying rectify their mistake
Can we make policies which can at least work for next six months!
You reduce duties and say revenue collection will not fall as volumes will increase. But once volume increases your foreign reserves takes flight to pay for the increased imports. ?????
I don’t think that FBR should try to balance the books by encouraging to increase the imports. I thought that we were trying to decrease the imports and trying to increase the exports. I think, keeping high taxes on imports will force people to innovate in the country and these innovations will increase the exports in the end.
I have an old mobile that came from Dubai a few years ago and was blocked by PTA unless I pay Rs 8,750 ransom. The set is in good condition but worth next to nothing and now it has to be discarded. I complained online , of course no response. Hope someone in the FBR will read this comment and realise that millions of such sets will be wasted , not a single ruppee will be generated in taxes and billions of ruppees will be wasted in importing new phones which are not required.
Add to that the plastic waste that will be generated!
This government has ruined the local textile industry with devalued currency, highest ever utility cost and now supporting capitalism by imposing RD yet again supporting just one blackmailing entity Gatron industries which already offers polyester yarns at much higher prices than imported yarns Local manufacturers of fabrics has been pushed further to shut down manufacturing and started importing worn out clothing rather than generating employments in Pakistan
Absolutely vague planning. This duty relief would lead to rise in import bill and ultimately current account deficit. .
There should be a yearly based quota system on the import of a brandnew mobile phone for personal use.
There should absolutely be zero percent (0%) import duty on import of one brandnew mobile phone in a fiscal year for the personal use by any person from any country against one CNIC card.
After cell phones were allowed to use in Pakistan there is a mushroom growth of mobile markets seen selling brandnew and used mobile phones at every nook and corner in any city and in most of the cases used phones once purchased by people from open market start giving problems after short intervals.
The government it at liberty to calculate any amount and percentage of duty for commercial importers for the sale of mobile phones in open market, however, importing of one brandnew mobile phone of any brand should be exempted from any import duty.
The government should maintain and computerized data of import for personal use of mobile phones so that this facility should not be misused by the people
Mind boggling ! If they want to give relief to general public then why are the authorities have halved the price expensive Mobile phones. Like higher duties on cars, same method should apply over here or is it some sort of favour at the cost of exchequer. Let better sense prevail...
Another U-TURN! How are we going to encourage local industry if we keep on succumbing to importers demands!
Sensible and pragmatic decision decision aimed to make life easier for the common man.
Wow ! Used cloths really ?
Its gonna kill manufacturing industry.
Good going.
@Aamir , "Can we make policies which can at least work for next six months!"
And what about the government maintaining their reputation for U turns? Come on this is a matter of pride for this government that it takes U turns and does not keep policies consistent and long term. I say that because noe in Pakistan's context 6 months is long term. I don't think realistically this government is or can or has the capability of thinking beyond today maybe at best tomorrow.
Pakistan is number consumer of worn clothes. These are refurbished locally and sold. This generates critical revenue. Good move
The potential local assemblers strangely finds it not feasible to assemble smart phones locally because he can't compete even if an imported phone is taxed at Rs. 1200. I just wonder, is there a single industry in this country which can claim to be competitive without getting subsidies or governmental restrains on the foreign competitors.
do we have time and resources for these experiments ?
This man is trying to destroy look industry and Imran Khan must get rid of him before the economy is destroyed of what is left if it.
An attempt to increase imports will affect exports resulting in a bigger trade deficit, which eventually will not be good for country's economy. So what are they trying to achieve here?
At least they realised and rectified their mistake, more importantly, this measure needs to be (urgently) applied on the auto sector.
My mobile cost less then 180usd but they asked me to pay tax of 80+usd
Pakistani politicians always take wrong decision. Why are they slashing duties for mobile priced above $350. These phones are mostly bought by wealthy people and they can afford that extra taxes. But here they reduced duties for these people but kept it same for phones which cost $30 or less because these phones would be bought by poor people and they should be taxed.
Good Work, I really appreciate your effort. Keep it up, Bro! Get Daily Latest Technology News, Guides, Free Registered Softwares & Tips and Tricks => Tech News
The import duty on Laptops are to be reduced because this item is very used by poor students studing in colleges/universities.
At least one mobile set should be allowed in one year for who is working aboard.
At least one mobile set. Should be allowed in one year for those people who are working aboard.
@Truth, devalued currency is not destruction but support of exports. Even the increased utility prices can be neutralised by this devaluation.
This should be implemented way earlier. Mobile markets and sales are down to earth, no one able to purchase high end phones with too much high price tag. If anyone want to bring phone from abroad taxes were high at ridiculous rate. Dollar rate already way above par value, this will be implemented in no time wasted.
Exhibit A of how dumb or zombie advisors bent on tarnishing Imran's image come up with ridiculous ideas.
Pakistan should urge china to manufacture cell phones Laptabs in Pakistan for local need and export. Government should supply one Laptab FREE OF COST to each student passing senior secondary examination.
Comments (30) Closed
And what about flight of dollars resulting from this measure, and the obvious disincentive for local assembly? Particularly considering that 30-200$ worth phone are what we can realistically expect to make here and not flagships.
Without doing any homework regarding putting heavy taxation on the above item,gradually realizing that they are not getting revenue as desired rather getting less now they are trying rectify their mistake
Can we make policies which can at least work for next six months!
You reduce duties and say revenue collection will not fall as volumes will increase. But once volume increases your foreign reserves takes flight to pay for the increased imports. ?????
I don’t think that FBR should try to balance the books by encouraging to increase the imports. I thought that we were trying to decrease the imports and trying to increase the exports. I think, keeping high taxes on imports will force people to innovate in the country and these innovations will increase the exports in the end.
I have an old mobile that came from Dubai a few years ago and was blocked by PTA unless I pay Rs 8,750 ransom. The set is in good condition but worth next to nothing and now it has to be discarded. I complained online , of course no response. Hope someone in the FBR will read this comment and realise that millions of such sets will be wasted , not a single ruppee will be generated in taxes and billions of ruppees will be wasted in importing new phones which are not required.
Add to that the plastic waste that will be generated!
This government has ruined the local textile industry with devalued currency, highest ever utility cost and now supporting capitalism by imposing RD yet again supporting just one blackmailing entity Gatron industries which already offers polyester yarns at much higher prices than imported yarns Local manufacturers of fabrics has been pushed further to shut down manufacturing and started importing worn out clothing rather than generating employments in Pakistan
Absolutely vague planning. This duty relief would lead to rise in import bill and ultimately current account deficit. .
There should be a yearly based quota system on the import of a brandnew mobile phone for personal use.
There should absolutely be zero percent (0%) import duty on import of one brandnew mobile phone in a fiscal year for the personal use by any person from any country against one CNIC card.
After cell phones were allowed to use in Pakistan there is a mushroom growth of mobile markets seen selling brandnew and used mobile phones at every nook and corner in any city and in most of the cases used phones once purchased by people from open market start giving problems after short intervals.
The government it at liberty to calculate any amount and percentage of duty for commercial importers for the sale of mobile phones in open market, however, importing of one brandnew mobile phone of any brand should be exempted from any import duty.
The government should maintain and computerized data of import for personal use of mobile phones so that this facility should not be misused by the people
Mind boggling ! If they want to give relief to general public then why are the authorities have halved the price expensive Mobile phones. Like higher duties on cars, same method should apply over here or is it some sort of favour at the cost of exchequer. Let better sense prevail...
Another U-TURN! How are we going to encourage local industry if we keep on succumbing to importers demands!
Sensible and pragmatic decision decision aimed to make life easier for the common man.
Wow ! Used cloths really ?
Its gonna kill manufacturing industry.
Good going.
@Aamir , "Can we make policies which can at least work for next six months!"
And what about the government maintaining their reputation for U turns? Come on this is a matter of pride for this government that it takes U turns and does not keep policies consistent and long term. I say that because noe in Pakistan's context 6 months is long term. I don't think realistically this government is or can or has the capability of thinking beyond today maybe at best tomorrow.
Pakistan is number consumer of worn clothes. These are refurbished locally and sold. This generates critical revenue. Good move
The potential local assemblers strangely finds it not feasible to assemble smart phones locally because he can't compete even if an imported phone is taxed at Rs. 1200. I just wonder, is there a single industry in this country which can claim to be competitive without getting subsidies or governmental restrains on the foreign competitors.
do we have time and resources for these experiments ?
This man is trying to destroy look industry and Imran Khan must get rid of him before the economy is destroyed of what is left if it.
An attempt to increase imports will affect exports resulting in a bigger trade deficit, which eventually will not be good for country's economy. So what are they trying to achieve here?
At least they realised and rectified their mistake, more importantly, this measure needs to be (urgently) applied on the auto sector.
My mobile cost less then 180usd but they asked me to pay tax of 80+usd
Pakistani politicians always take wrong decision. Why are they slashing duties for mobile priced above $350. These phones are mostly bought by wealthy people and they can afford that extra taxes. But here they reduced duties for these people but kept it same for phones which cost $30 or less because these phones would be bought by poor people and they should be taxed.
Good Work, I really appreciate your effort. Keep it up, Bro! Get Daily Latest Technology News, Guides, Free Registered Softwares & Tips and Tricks => Tech News
The import duty on Laptops are to be reduced because this item is very used by poor students studing in colleges/universities.
At least one mobile set should be allowed in one year for who is working aboard.
At least one mobile set. Should be allowed in one year for those people who are working aboard.
@Truth, devalued currency is not destruction but support of exports. Even the increased utility prices can be neutralised by this devaluation.
This should be implemented way earlier. Mobile markets and sales are down to earth, no one able to purchase high end phones with too much high price tag. If anyone want to bring phone from abroad taxes were high at ridiculous rate. Dollar rate already way above par value, this will be implemented in no time wasted.
Exhibit A of how dumb or zombie advisors bent on tarnishing Imran's image come up with ridiculous ideas.
Pakistan should urge china to manufacture cell phones Laptabs in Pakistan for local need and export. Government should supply one Laptab FREE OF COST to each student passing senior secondary examination.