FBR May Review Tax Relief on Imported Phones

Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has informed the National Assembly Standing Committee on Finance and Revenue that the government is prepared to examine the possibility of reducing the existing 20% regulatory duty imposed on imported mobile phones, particularly for devices valued at up to $200.

The assurance was provided during a meeting of the committee chaired by Syed Naveed Qamar, which also reviewed and approved proposals seeking enhanced customs duties and special excise duties on imported hybrid, electric, and luxury vehicles.

During the briefing, FBR officials presented details of the current taxation framework applicable to imported mobile phones. According to the officials, handsets valued up to $30 are subject to an effective tax burden of approximately 25%, while mobile devices priced between $31 and $100 attract an effective tax rate of 36%.

For smartphones valued between $101 and $200, the effective tax incidence rises to 40%, whereas devices falling within the $201 to $350 price range are subject to an effective tax rate of 38%.

Similarly, mobile phones priced between $351 and $500 attract an effective tax burden of 40%, while premium devices exceeding $500 in value face an effective tax rate of approximately 41%.

Officials further informed the committee that tax liabilities vary significantly across categories, with per-device tax amounts ranging from approximately Rs1,500 to as high as Rs141,500, depending on the handset’s assessed value.

According to data presented during the meeting, nearly 44% of imported mobile phones fall within the $31 to $100 category, while the average effective tax burden across all imported handset categories currently stands at approximately 39.6%.

Committee members expressed concern over the widespread use of non-PTA-approved mobile devices across Pakistan and suggested the introduction of an instalment-based tax payment mechanism to facilitate legal registration and compliance.

Members noted that similar financing and instalment arrangements are commonly available in various international jurisdictions, particularly for low-value consumer electronics and technology products.

Following the discussion, Committee Chairman Syed Naveed Qamar directed the FBR and the Pakistan Telecommunication Authority (PTA) to jointly develop and present a practical framework enabling taxpayers to pay mobile phone-related duties and taxes through instalment plans.

During the proceedings, committee member Hina Rabbani Khar questioned the policy rationale behind the prevailing taxation structure on imported mobile phones. She raised concerns regarding whether the primary objective of the high tax regime was revenue generation or the protection of specific commercial interests within the domestic market.

She further observed that consumers should not be subjected to excessive financial burdens when purchasing essential communication devices, particularly in an increasingly digital economy where mobile connectivity plays a critical role in daily life, education, and business activities.

The committee is expected to continue reviewing proposals relating to mobile phone taxation and consumer facilitation measures before final recommendations are incorporated into the Finance Bill framework.