Karachi, July 25, 2024 – The Federal Board of Revenue (FBR) has announced new sales tax rates on imported mobile phones, effective immediately. The revised tax structure, introduced through amendments in the Finance Act of 2024, aims to regulate the import and sale of mobile phones in Pakistan.
Under the updated Sales Tax Act, 1990, the FBR has delineated specific tax rates based on the value and condition of imported mobile phones. Notably, a 25% ad valorem sales tax will be imposed on completely built unit (CBU) mobile phones valued over $500 at the time of import or registration (IMEI) number by Cellular Mobile Operators (CMOs). This higher tax rate is intended to encourage local manufacturing and reduce reliance on imported goods.
For CBU mobile phones valued at $500 or below, a standard sales tax of 18% will apply. Additionally, mobile phones imported in Completely Knocked Down (CKD) or Semi Knocked Down (SKD) condition, regardless of their value, will also attract an 18% sales tax. This uniform tax rate on locally manufactured phones aims to support domestic production initiatives.
According to the FBR’s notification, the liability to pay taxes varies based on the category of goods:
• Cellular Mobile Operators (CMOs) are responsible for paying taxes on specified goods as listed in Table-I.
• Importers bear the tax liability for goods listed in columns (3) and (4) of Table-II.
• Local manufacturers are mandated to pay taxes on goods specified in column (5) of Table-II.
The payment of taxes under this new schedule will follow the timeline specified in section 6 of the Sales Tax Act, 1990, ensuring adherence to legal and procedural guidelines.
This policy shift by the FBR is expected to have profound implications on the mobile phone market in Pakistan. It aims to balance revenue generation with promoting local industry growth, aligning with broader economic strategies aimed at reducing import dependence and fostering domestic manufacturing capabilities.
Industry experts have already begun analyzing the potential effects of these tax reforms. While some anticipate a temporary disruption in the availability and pricing of imported mobile phones, others foresee long-term benefits for local manufacturers and consumers, including potential job creation and technological advancement.
As stakeholders adapt to these regulatory changes, the FBR remains committed to monitoring their impact closely. Continued dialogue between the government, industry leaders, and consumer advocates will be crucial in navigating the evolving landscape of Pakistan’s mobile phone market under these new tax regulations.