New Strategy for Tax on Imported Mobile Phones

New Strategy for Tax on Imported Mobile Phones

Mobile tax in Pakistan is one of the biggest problems for people traveling abroad off and on. The government introduced many tax reforms on imported phones and faced a lot of public criticism. However, now the Federal Board of Revenue has received many proposals from experts to ease the tax reforms in order to increase Smartphone import. Experts say FBR should re-allow one duty-free mobile in a calendar year under gift or personal baggage policy. Furthermore, FBR should reduce the slabs on all categories of smartphones to increase the penetration of the latest smartphones into the country.

So, FBR requires budget proposals for the next financial year. Telecom companies are also following the matter in order to make FBR reconsider the tax proposals. These telecom companies want FBR to modify the policies to deal with negative implications associated with Device Identification, Registration and Blocking System (DIRBS).

Experts of the one leading telecommunication company say that the Government should develop a strategy for the Smartphone depreciation and should revise tax slabs accordingly as is the case of other import goods.

Furthermore, Prime Minister Imran Khan also laid emphasis on facilitating expatriate Pakistanis. So, Pakistan should reintroduce the allowance of one duty-free handset per the calendar year under gift/personal baggage policy. It is a matter of fact the government’s tax pool will increase as a Smartphone increase in the country. Furthermore, it will reduce the street crime ratio as the government will have enough data regarding smartphones in access.

Pakistan Telecom Authority (PTA) had put its efforts to implement the Device Identification, Registration and Blocking System on all cellular mobile operators. The DIRBS system’s objective is to verify and detect illegal handsets. Furthermore, this system will also help in the identification of non-compliant and non-tax paid handset.  This system will authenticate all available handsets and will detect any illegal handset spontaneously.

According to policy, an overseas Pakistani or foreign traveler will have to pay the tax on the handset if he/she uses the Pakistani network SIM more than 60 days. Implementation of DIRBS has brought so many problems like heavy taxation, a negative effect on the second-hand handsets retail industry. Furthermore, affordability has become a big challenge for people. Consequently, the Prime Minister’s vision of Digital Pakistan will hamper.

With these new reforms, the business of second-hand handsets has also declined tremendously. This is because many of these handsets can only work with registered SIM and with the registered SIM their values declined remarkably. Second-hand phones were available at lower prices but now person who is going to buy second-hand phone apprehensive about buying these used sets because IMEI number may be tampered and may bring trouble for buyer.

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