Duty collection on mobile device import doubles to Rs54bn

Published November 29, 2020
The increase in revenue came after the government imposed a ban on use of non-duty paid or smuggled mobile phones in the country.
The increase in revenue came after the government imposed a ban on use of non-duty paid or smuggled mobile phones in the country.

ISLAMABAD: Pakistan Customs has collected Rs54 billion in the last year on import of mobile devices through Device Identifica­tion, Registration and Blocking System (DIRBs), which is 145 per cent higher over the preceding year.

The data released by the Federal Board of Revenue (FBR) showed that the increase in revenue from mobile phone import is due to the fact that now any non-duty paid/smuggled phone cannot be used in Pakistan without payment of due taxes and registration with the Pakistan Telecom­mu­nication Authority (PTA).

Pakistan Customs in collaboration with the PTA introduced the DIRBs to eliminate the usage of smuggled devices in the country. This successful intervention has attracted huge investment in the country, according to a customs official.

The official said that 17 companies are now manufacturing mobile phones in the country while adding that the TCL also plans to invest in Pakistan’s mobile manufacturing industry with Airlink whereas another company Alcatel is also exploring the possibility.

At the same time, due to the geographic proximity to China, which is a global hub for handsets manufacturing and is currently looking for investing outside the country due to increasing labour costs as well as trade tensions with the United States, presents a huge opportunity for the country.

Better use of information technology and enforcement through targeted operations against smugglers, the issue of availability of smuggled items has been addressed to a large extent which has provided space for local industry, he added.

Since July 1, 2019, the government has also withdrawn the facility of duty-free mobile handset under the baggage rules from abroad. The decision, according to the FBR, was taken following receipt of numerous complaints of the scheme’s misuse.

Official data showed that travellers brought as many as 1,389,707 mobile handsets in to the country during FY20 under baggage and registered it with DIRBs. As a result, the Pakistan customs raised more than Rs5.8bn in the last year from expatriates and travellers on import of mobile phones under baggage.

At the same time, there is a clear policy for mobile phones import commercially. Under the commercial imports, as many as 19.80m handsets were imported during the period FY20 at a total value of Rs209.316bn with the FBR collecting Rs39.414bn revenue on it.

In May, the government approved mobile phone manufacturing policy which to help nurture an indigenous handset industry that can be internationally competitive. There is a significant local demand due to increase in size of the market as well as sophistication in terms of migration towards 4G.

The related and support industries like packaging, plastics, and IT software etc already have a strong presence in the local market.

Under the policy, government will give three per cent allowance to local manufacturers for exports of mobile phones and locally-assembled sets will be exempted from 4pc withholding tax on domestic sales.

The government will maintain tariff differential between completely built unit imports and completely knocked down manufacturing till the expiry of the policy. In return, the domestic industry will have to ensure localisation of parts and components as per the road map included in the policy.

Amendments have been introduced in the Customs Act 1969 to award harsh punishment including forfeiture of property, godowns used for storage of smuggled goods, penalty and imprisonment up to 10 years.

Published in Dawn, November 29th, 2020

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