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FBR proposes to reduce taxes on imported phones by 50%

FBR pitched an idea to cut the regulatory duties by 50% in anticipation of supporting the digitization process, however, it can offset the local assembly businesses of smartphones who are at advanced stages of the production process

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Federal Board of Revenue (FBR) is mulling to cut the regulatory duties on the imported phones by 50%, a move purely taken to provide relief to the common man and thrive digitization process in Pakistan, asserted Federal Board of Revenue.

Ministry of Finance is optimistic that a reduction in regulatory duties will not cast a significant impact on the overall collection since lower prices will encourage the dealers to import a higher number of phones.

“This reduction in duty/tax is expected to increase import volume of mobiles in Pakistan,” stated the summary endorsed by Chairman FBR Shabbar Zaidi. Adding that this may “to some extent, neutralize the otherwise negative impact of this measure.” While the reduction in duties has already been proposed in May’s budget.

The highest reduction will be seen on the mobile handsets with a cost freight value of in-between $100 to $200, on which the existing duty of Rs.2430 will be pulled down to Rs.1200.

The government decided to strictly check the import of mobile phones in the country following reports of duty-free imports in passenger luggage and its open sale in the market.

Similarly, the regulatory duty on smartphones worth between $200 and $350 has been slashed by Rs.740. While up to Rs. 4500 will be decreased on phones ranging above $350 and under $500.

The reduction in regulatory duties will be a disincentive for local assembly and businesses who are in the advanced stages of setting up the local mobile phone assembly plants in the country. The manufacturing policy is being finalized by the Commerce Minister Razzak Dawood in collaboration with the Engineering Development Board. The assembly of mobile phones is a potential market moved out of China, laying opportunities for other countries to attract investment in this sector.

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Earlier this year, the government had restructured the regulatory duties on the imported phones in six different slabs, levied the highest RD on the expensive mobile sets.

The change in the regulatory duty was enforced through the Finance Supplementary (Amendment) Bill 2018 intended to surge the revenue collection by facilitating the fair assessment of mobile phones at the import stage.

Read more: Pakistan crosses 150 million mobile subscribers milestone

The government decided to strictly check the import of mobile phones in the country following reports of duty-free imports in passenger luggage and its open sale in the market. To check this along with the smuggling of the imported phones a separate mechanism for the registration of phones was introduced.

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