FBR (Federal Board of Revenue) has introduced a tax on smartphone and normal featured phone. According to the sources PKR 1000 tax will be charged on importing every smartphone while an amount of PKR 500 is taxable on every featured phone imported in Pakistan.
Smartphone is defined as a cellular mobile that has
- 4 GB and higher internal memory or basic memory
- Has a touch screen function
- Process range starts from dual core to higher
- Camera is minimum 5 Megapixel or higher than that
- Operating system is iOS, Android version 2.3, Android Gingerbread or higher, Blackberry and Windows 8 for mobiles or higher
Mobile phones featuring these specifications will be considered smartphones and will be taxable PKR 1000 while the rest of the mobile phones come into other category and will be charged PKR 500 only.
According to estimates, FBR is likely to earn PKR 5 Billion annually by imposing these new taxes. It is worth mentioning that FBR is short of tax target that is PKR 2.381 Trillion. This is an attempt to achieve the tax target.
Another important point is that each and every type of mobile set will be charged tax and those mobile phones imported from China are also under this tax system. This means that the prices of mobiles will go up in the market by 500-1000 PKR.
It is a very good opportunity for those who have a big stock with them and due to the increase in price; they are going to make huge profits. The end users are general public and they are going to suffer the most as they are already paying the highest tax rates as compared to every other sector in Pakistan.
This new taxation system will also invigorate the illegal channels to import the cell phones and it might affect the mainstream mobile phone manufacturers like Samsung, Nokia and Sony Ericson. They might lose some of their market share.
Commerce sector has already started to protest on Government’s decision to impose these new taxes and their demand is that the Government should withdraw this SRO. In past Government imposed 500 PKR sales tax on every mobile phone that is imported in Pakistan and later it was reduced to 250 PKR per cell phone considering the growing demand of mobile phones in the country.
A copy of SRO can be seen below.