Mobile Phone Duty Reduction Under Consideration in Pakistan’s 2023-24 Budget

The Federal Board of Revenue (FBR) is considering reducing mobile phone duty in the 2023-24 federal budget, set to be unveiled on June 9th, in response to recommendations from Pakistan Mobile Phone Traders.

Previously, the government had increased mobile phone duty by 100% to 150%, which resulted in a significant decrease in revenues, with only Rs5 billion to Rs10 billion deposited into the national treasury instead of the expected Rs85 billion.

With over 186.9 million mobile phone users in Pakistan, the proposed reduction in duty rates, currently at 100% to 150% for all mobile phones, is a crucial step to alleviate the financial burden of the ongoing fiscal crisis.

Increasing taxes have threatened to destabilize the mobile industry, impacting traders and ordinary citizens relying on mobile phones for their livelihoods.

The Mobile Phones Traders Association delegation has put forward recommendations to Finance Minister Ishaq Dar and other senior officials with hopes of integrating these proposals into the forthcoming budget.

Pakistan’s 75% duty on mobile phones starkly contrasts with the lower rates in neighboring countries such as Singapore, Bangladesh, and Turkey. This disparity has resulted in many Pakistanis using smartphones without paying the necessary duties, often in collusion with FBR.

The exorbitant duty on mobile phones has made these essential devices inaccessible to the country’s less affluent population, including laborers, daily wage earners, students, professionals, and civil society members.

Munir Beg Mirza, General Secretary of the All Pakistan Mobile Phones Traders Association, noted that the ban on used mobile phone imports has spurred smuggling, benefiting a few companies. Additionally, people use smartphones illegally without paying high taxes, leading to further losses for the national treasury.

Mirza suggested that a fair duty imposed in the new fiscal year would not only ensure every consumer pays the tax but could also boost government revenues from mobile phones to Rs100 billion, up from the current Rs5 billion.