4pc WHT exemption on local cellphones sale: Manufacturers urge ministry to implement cabinet decision

ISLAMABAD: Local mobile phone manufacturers have urged the Ministry of Industries and Production to implement Cabinet decision of exempting four percent withholding tax on the sale of Pakistan made handsets.

In a written letter to the Engineering Development Board (EDB) the Pakistan Mobile Phone Manufacturers Association (PMPMA) while urging the Ministry to exempt the sales of local manufactured cell phones from 4 percent withholding tax has requested for the implementation of June 2, 2020 Cabinet decision.

The letter was sent to Chief Executive Officer (CEO) EDB by PMPMA, copies of which have also been sent to Industries Minister and other Ministries, the Association revealed.

According to official sources the PMPMA since the approval of the mobile device manufacturing policy in June 2020, has repeatedly requested the relevant officials for the implementation of the policy in letter and spirit, so that they can optimise their operations but so far the ministry does not appear to be serious in implementing the policy.

This was the industry’s perception after the meeting held in the office of Minister of Industries on 3rd September, 2020 and subsequent follow up meeting with the Chairman and CEO (EDB) held in Lahore on 18 September, 2020.

Pakistan Mobile Phone Manufacturers Association deliberated the issue and raised the following five point opinion in the letter: (i) the exemption of 4 percent withholding tax on local sales of locally manufactured mobile phones is an integral part of the mobile device manufacturing policy approved by the federal cabinet on 2nd June, 2020.

(ii) The exemption is absolutely critical to provide a level playing field to the local industry which consists of more than 15 manufacturers and provides employment to over 7 to 10 thousand. Moreover the local cell phone manufacturers are planning to expand their plants to produce more handsets to meet the local demand for mobile phones.

(iii) If the exemption, already approved under the MDMP, is not notified, it shall disturb the differential envisaged under the MDMP between the duty and taxes on CKD/SKD kits of locally manufactured mobile phones as compared to CBU imports into the country.

(v mobile phone industry is strategic a sector which, if properly incentivised, can provide employment opportunities to over 200,000 Pakistanis, and within a short period of time, create export opportunity worth billions of rupees.

Copyright Business Recorder, 2020