On Tuesday, members of the Standing Committee on Finance of the National Assembly, chaired by Syed Naveed Qamar, unanimously demanded a reduction in mobile phone taxes.
According to Naveed Qamar, the Federal Board of Revenue (FBR) is increasing vehicle taxes in addition to levying excessive taxes on mobile phones. He wondered if Pakistan had made it illegal to own a car or a mobile phone.
Committee members stressed that mobile phones are no longer luxury items but essential for everyone.
FBR officials admitted that taxes on high-end smartphones can reach up to 55 percent. These include gadgets that are in competition with premium brands like the iPhone.
According to officials, smartphone sales accounted for 18 percent of the Rs.82 billion in taxes collected from mobile phones during the most recent fiscal year.
Committee member Sharmila Faruqi told the meeting she bought a phone for Rs. 370,000 but had to pay Rs. 190,000 in tax. The phone is more expensive than Rs. 550,000 or Rs. 600,000. She added, “Don’t charge so much tax that it becomes unbearable,” noting that some phones have taxes that reach 60%.
FBR officials informed the panel that overseas Pakistanis can use duty-free mobile phones for up to 60 days upon arrival. Gilani lamented that even older phones, like the iPhone 6, are subject to a tax of Rs. 35,000, whereas an iPhone 12 Pro is subject to a tax of Rs. 160,000. He said high taxes push people toward using non-PTA phones and discourage freelancers.
The chairman of the FBR stated that the board is prepared to present a comprehensive analytical report on the taxation of mobile phones. PTA Chairman added that 94 percent of mobile phones in Pakistan are assembled locally, and only six percent of expensive imported phones are being targeted for higher taxes.
He stated that Pakistan is anticipated to switch to 5G following a planned spectrum auction in February.
Additionally, the PTA Chairman stated that he paid Rs. 100,000 in mobile phone tax on his own. Naveed Qamar said policymakers must consider not only tax revenue but also the broader economic impact.
The committee agreed to examine the matter before the subsequent budget and requested a comprehensive report on mobile phone taxes by the middle of March. Additionally, tax cuts were proposed by Hina Rabbani Khar, Ali Qasim Gilani, and a number of other members.
Members argued that lowering tax rates will increase the number of tax filers and boost device registration. Additionally, they asserted that the FBR’s valuation of phones exceeds market prices, which the Chairman of the FBR promised to examine.
Officials from the PTA stated that, except for Apple, almost all other smartphone brands are currently assembled in Pakistan and that only 6% of expensive phones are imported.
The 5G license, according to the PTA Chairman, will probably be issued in February or March of next year.
Committee members also raised concerns that consumers must pay tax again if their phone is stolen. They said smartphones are already too expensive and out of reach for many people.
According to Naveed Qamar, smartphones are now essential tools rather than luxury items, and the claim that “we are under an IMF program” can no longer be used to justify high taxes.
Officials from the FBR made it clear that the phone’s price, not its model, is the basis for taxation.
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