Pakistan may cut taxes on imported mobile phones worth up to $200

Pakistan's government has indicated it may reduce taxes and duties on imported mobile phones worth up to $200 (PKR 55,600), as lawmakers pressed for consumer relief during a National Assembly Standing Committee on Finance meeting.

Why is Pakistan considering a tax cut on imported mobile phones?

The possibility emerged during a Federal Board of Revenue (FBR) briefing on the taxation structure for imported and locally manufactured mobile phones, chaired by committee chairman and MNA Syed Naveed Qamar.

FBR Chairman Rashid Mahmood Langrial told lawmakers the government could consider lowering duties on low-cost handsets, saying the fiscal impact would be limited to around PKR 1 billion.

What did lawmakers say about mobile phone taxes?

The proposal came under discussion as several lawmakers criticized the broader budget, arguing it offered little relief to the public. Committee member Javed Hanif Khan said the budget had failed to provide meaningful support to consumers, while MNA Bilal Azhar Kayani questioned why amendments had been introduced to the Finance Bill if they did not translate into public relief.

Former foreign minister and committee member Hina Rabbani Khar also challenged the rationale behind the taxation framework, asking whether the measure was designed to generate revenue or protect specific market interests. She argued that such a heavy tax burden should not be placed on mobile phone purchases.

How much revenue does Pakistan collect from mobile phone taxes?

Responding to the criticism, Langrial said taxes on imported mobile phones remain a significant source of government revenue and are factored into annual collection targets. He told the committee that the government collects around PKR 37 billion each year from imported mobile phones, including nearly PKR 21 billion from Apple device imports alone.

Finance Secretary Imdadullah Bosal cautioned that any reduction in taxes on lower-priced phones would require the government to identify alternative revenue sources to offset the shortfall.

What is the current tax rate on imported mobile phones in Pakistan?

According to the FBR briefing, imported mobile phones valued up to $30 face an effective tax rate of 25%, while devices priced between $31 and $100 are taxed at 36%. Phones worth between $101 and $200 are subject to a 40% tax rate, while handsets in the $201 to $350 bracket face an effective tax of 38%.

Smartphones priced between $351 and $500 are taxed at 40%, while devices valued above $500 face an effective tax burden of 41%. Officials said the tax amount per handset ranges from about PKR 1,500 to PKR 141,500, depending on the device's value, with the average effective tax rate across all imported mobile phone categories standing at 39.6%.

What other changes could affect mobile phone buyers in Pakistan?

Lawmakers also raised concerns over the growing number of non-PTA-approved mobile phones in the market and proposed introducing an installment-based mechanism for the payment of taxes and duties on mobile devices.

Committee members urged the FBR and the Pakistan Telecommunication Authority (PTA) to jointly develop a plan allowing consumers to pay these taxes in installments, noting that such payment facilities are widely available internationally, even for low-value purchases.

The committee chairman directed the FBR and PTA to present a workable proposal on the matter at future meetings.