ISLAMABAD: The government is likely to increase duties and taxes on the commercial import of mobile phones in CKD/ SKD condition in coming budget (2024-25).
Sources told Business Recorder that a distinction would be created between the imported and locally manufactured mobile phones to encourage local production. There is a possibility that the sales tax zero-rating may be abolished to the extent of packing of mobile phones under the proposed changes in the mobile device manufacturing policy.
Presently, sales tax is applicable on CBUs at the time of import or registration (IMEI number by CMOs). Sales tax is also applicable on import in CKD/ SKD condition and supply of locally manufactured mobile phones in CBU condition.
Jan-Apr: 10.85m cell phones made locally
The FBR has received a budget proposal of the Overseas Investors Chamber of Commerce and Industry (OICCI) that the government should abolish rate of advance tax on telecom subscribers completely as the majority of the subscriber’s base falls below the taxable limit and is hampering the affordability of mobile service. In its taxation proposals for budget 2024-25, the OICCI also recommended the government to revamp the withholding tax regime as it will make the tax claims and its verification mechanism more transparent with minimum operational hassles.
The chamber stated that advance tax on telecom services was reduced via Finance Act, 2021 from 12.5 per cent to 10 per cent for fiscal year 2021 and to eight per cent for future years.
However, through the Finance (supplementary) Act, 2021, the rate of withholding tax increased from 10 per cent to 15 per cent. Increased tax hampers the affordability of mobile service which is a critical service for entire population and more than 70 per cent population of Pakistan lives below poverty line. Telecom service is also critical for economic growth of a country.
Copyright Business Recorder, 2024
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