FBR Considering Reduction in Mobile Phone Duties in Upcoming Budget

• The number of mobile phone users in Pakistan has exceeded 186.9m.
• FBR is considering the mobile phone association’s budget proposals.
• The industry is on the brink of collapse due to an increase in taxes.

According to a report in The News on Monday, the Federal Board of Revenue (FBR) in Pakistan is contemplating the reduction of duties on mobile phones in the federal budget for the fiscal year 2023-24, set to be unveiled on June 9. This decision comes in response to suggestions put forth by the Pakistan Mobile Phone Traders.

In the past, the government had raised the duty on mobile phones by 100% to 150%, resulting in significantly lower revenue deposits of only Rs5 billion to Rs10 billion, instead of the anticipated Rs85 billion, in the national exchequer.

With the number of mobile phone users in Pakistan exceeding 186.9 million, the FBR aims to address the financial crisis by considering a substantial reduction in the current duty rates on cellular phones, which range from 100% to 150% for small and large mobile phones.

The mobile industry has been on the verge of collapse due to increased taxes, adversely affecting not only traders but also the livelihoods of millions of people. To tackle this issue, a delegation from the Mobile Phones Traders Association has presented recommendations to Finance Minister Ishaq Dar and other senior officials. The delegation has expressed its commitment to incorporating these recommendations into the budget, which is currently under review for inclusion.

It has come to light that Pakistan imposes a 75% duty on cellular phones, whereas neighboring countries like Singapore, Bangladesh, and Turkey have lower duty rates. Consequently, individuals have been evading duties by using smartphones, leading to smuggling and loss of revenue for the government.

The additional 100% to 150% duty on cell phones has rendered them unaffordable for the poor, laborers, daily wage earners, students, professionals, the legal community, and civil society. Munir Beg Mirza, the General Secretary of the All Pakistan Mobile Phones Traders Association, highlighted the rise in smuggling due to the ban on importing used mobile phones.

He emphasized that appropriate duty rates in the new financial year would not only ensure tax compliance from consumers but also generate Rs100 billion in revenue for the government, a significant increase compared to the current figures.

The FBR’s consideration of reducing mobile phone duties in the upcoming budget aims to alleviate the burden on individuals and revive the struggling mobile industry while boosting revenue collection for the government.