Import Duties cut by 86% on phones: Smartphones expected to get Cheaper

In order to ramp up the digitization process in Pakistan, FBR has reduced the import duty on the mobile phones costing $100 or less by 86%. The decreased import duty, however, is anticipated to irk the local manufacturers of mobile phone since lower import duties is expected to boost the sales of the imported phones.

import duties

Federal Board of Revenue has reduced the import duties on the mobile phones costing $100 or less in a bid to facilitate the digitization of Pakistan.

FBR has reduced the sales tax by reducing the import duty from Rs,1300 to Rs.200 earlier people buying the mobile phones of this category were paying the Rs.750 in duties.

FBR recorded the import volume of mobile phones of $391million in the financial year from July to November 2019 as compared to $248 million import volume in the same period last year indicating that there has been a surge in import volume by 58%.

The manufacturing policy is being finalized by the Commerce Minister Razzak Dawood in collaboration with the Engineering Development Board

Senate Standing Committee on Information Technology instructed FBR to cut down the import duty to bolster digitization in Pakistan and provide relief to the common man. Hence, upon the recommendation of the Senate Committee, the Ministry of Commerce and Ministry of IT jointly prepared a proposal for the revised sales tax and regulatory duties on imported mobile phones.

Sales and withholding tax on mobile phones costing above $100 is unchanged, however, the revision in the regulatory duties on the import of mobile phones is underway.

In September, last year, the Federal Board of Revenue (FBR) proposed to cut the regulatory duties on the imported phones by 50%- a move intended to provide relief to the common man and thrive digitization process in Pakistan, asserted Federal Board of Revenue.

Read more: FBR proposes to reduce taxes on imported phones by 50%

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 government had also quoted the revised import duties on mobile phones in higher slabs. 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.

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

Read more: Policy profiting local mobile phone manufacturers is in the works

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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