The Federal Board of Revenue (FBR) is currently considering options to reduce the duty on mobile phones in the upcoming federal budget for the fiscal year 2023-24.
The decision comes after suggestions from the Pakistan Mobile Phone Traders, who have highlighted the adverse impact of high duties on the mobile phone industry. Currently, the duty on mobile phones is set at around 100% to 150%, resulting in a lower than expected revenue of Rs5 billion to Rs10 billion, instead of the projected Rs85 billion.
Pakistan has a staggering number of mobile phone users, exceeding 186.9 million. To address the financial challenges faced in the current fiscal year, the government is contemplating a significant reduction in the duty rates on cellular phones, which currently impose a heavy burden on both small and large mobile phones.
The mobile industry in Pakistan is facing the risk of collapse due to the increased taxes. This not only affects traders but also has a significant impact on the livelihoods of millions of people.
In light of these concerns, a delegation from the Mobile Phones Traders Association has submitted recommendations to Finance Minister Ishaq Dar and other senior officials, with the hope that these proposals will be incorporated into the budget.
Comparatively, Pakistan imposes a 75% duty on cellular phones, which is higher than other countries in the region such as Singapore, Bangladesh, and Turkey. Consequently, individuals have resorted to smuggling and using smartphones without paying duties, resulting in revenue loss for the national exchequer.
The additional 100% to 150% duty on cell phones has made them unaffordable for the poor, laborers, daily wage earners, students, professionals, the legal community, and the civil society.
Munir Beg Mirza, the General Secretary of the All–Pakistan Mobile Phones Traders Association, highlighted the increase in smuggling due to the ban on importing used mobile phones. Moreover, the widespread use of smartphones without paying heavy taxes further contributes to the loss of revenue.
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