NA panel seeks review of high taxes on mobile phones

• Recommends tax reduction for sake of affordability; Qamar likens income tax on phones to sales tax• Senate committee questions high SMS alert charges

ISLAMABAD: A parliamentary committee on Thursday expressed concern over the high tax burden on mobile phones, directing the Tax Policy Office (TPO) in the Ministry of Finance to submit a detailed report on the existing taxation structure for both imported and locally manufactured devices.

The National Assembly Standing Committee on Finance, chaired by MNA Naveed Qamar, observed that income tax on mobile phones was effectively being treated as a sales tax and directed the authorities to review the practice.

The committee also asked for a detailed written note outlining the rationale, revenue implications and policy objectives behind the current tax regime. FBR Chairman Rashid Mahmood Langrial briefed the committee on the mobile taxation.

After a presentation, the committee recommended a reduction in mobile phone taxes. Tax officials assured the committee that the matter would be reviewed during the upcoming fiscal year budget process.

Mr Qamar called for a detailed report, particularly on the tax treatment of mobile phones under the Completely Built Unit (CBU), Completely Knocked Down (CKD) and Semi Knocked Down (SKD) categories.

The committee recommended a review of the existing taxation structure to ensure equity, improve affordability and support local manufacturing, while also assessing exemptions available under the Income Tax Ordinance, 2001, and the Baggage Rules, 2006.

Members were informed that imported mobile phones priced above $500 attract a total tax burden of around Rs76,000, translating into an effective tax rate of about 54pc. Devices in the $700-$750 range face a slightly higher incidence, with taxation reaching nearly 55pc.

FBR officials said imported handsets were taxed at around 54pc of their value, while locally manufactured or assembled devices were subject to a lower rate of roughly 25pc.

The briefing noted that an 18pc general sales tax (GST) applies to mobile phones, along with........

© Dawn Business