06/24/2022

Pakistan Government Imposes Additional 17% Tax on Mobile Phones

January 22, 2022 – In a recently passed Supplementary Finance Budget, also known as the mini-budget, the government of Pakistan, led by the Pakistan Tehreek-i-Insaf (PTI), has increased the taxes imposed on imported mobile phones in the country. According to the new schedule, all imported phones will now be registered with an additional 17 percent tax determined by their market value, collected by the Pakistan Telecommunication Authority (PTA) through its Device Identification, Registration and Blocking System (DIRBS).

According to the amendment approved by the parliament on January 15, the newly imposed tax would lead to the price hike of approximately 30 percent on the original price. The Federal Board of Revenue (FBR) which collects taxes on goods and services in the country, lists the updated schedule as such,

Source: FBR

 

The authorities require that the phones imported in the country be registered with PTA’s DIRBS program and taxes be paid within 60 days to avoid blocking of the mobile phone. Those bringing phones worth US $200 (~35,000 PKR as of January 22, 2022) and above in the country from abroad will have to pay an additional 17 percent tax according to the value of the mobile phone. This means that a phone that costs 35,000 PKR in the international market would cost at least and over 55,600 PKR. Whereas phones under $200 would be exempted from this new tax slap.

Currently, the price of an imported basic smartphone falls in this bracket, whereas locally manufactured smartphones cost around and over 15,000 PKR that offer limited and low quality features. Where critics of the amendment and various social media users have expressed disapproval, calling it a threat to the tech-based economy of the country, others believe this will increase local manufacturing and sales of smartphones devices leading to the boost in economy.

Earlier news on the supplementary budget proposal suggested that the government was planning to impose a 17 percent tax on laptops, personal computers and other technological devices imported in the country, a news that was met with severe criticism from the citizens leading to the disposition of the tax increase in the next update of the budget. Whereas,  in June 2021, the government shared its plan to increase tax on phone calls exceeding 5 minutes, the proposal which was also rolled back post-criticism.

The current government’s vision of Digital Pakistan has been at the center of its mandate during the elections of 2018 that led to its appointment to make the government. However, introduction of draconian laws to regulate the technology sector, increased taxes and scrutiny on goods and services in the past 4 years have led to many losing confidence in the vision.

The imposition of new taxes comes after the International Monetary Funds (IMF)’s requirement of imposing new taxes worth 360 billion PKR in the country to revive the $6 billion funding program. The government which has, before coming into power, repeatedly committed to not turn to IMF for loans in its tenure, has slapped taxes of over 335 billion PKR on previously exempted categories, whereas, increased taxes on goods and services in other categories to meet the requirements for the bailout.

The digital divide in the country remains exponential with affordability of mobile phones and internet services being some of the key deterrents, along with infrastructural, geographic and cultural barriers. With the world focusing on increasing digital accessibility and inclusion owing to the need to be connected with technology for economic growth, citizens in Pakistan continue to find themselves amidst fighting battles with new policies and regulations making access to technology more difficult and out of reach for the masses. It is crucial to mention that during the COVID-19 pandemic, Pakistan, much like the rest of the world, has acknowledged that technological access is a need rather than a luxury – a realisation that came much later than other countries. However, despite this, digital access remains a dream for the majority of the population of 220 million that constantly struggles to afford basic necessities of life under the draconian tax regimes that the government keeps imposing.

Hija is the Senior Programs Manager at Media Matters for Democracy. She leads digital rights and internet governance advocacy at MMfD. Tweets at @hijakamran

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