National Assembly Panel Advocates for Mobile Phone Tax Reduction
The National Assembly Standing Committee on Finance has put forward a recommendation to lower taxes on mobile phones in Pakistan. This move came during a meeting held on Thursday at the Parliament House in Islamabad, where lawmakers scrutinized the current duties and taxation framework applied to both imported and locally assembled devices.
Detailed Briefing on Mobile Phone Taxation
Chaired by Syed Naveed Qamar, MNA, the committee received an extensive briefing on the existing tax regime for mobile phones. Officials outlined the income tax and sales tax rates imposed on imported as well as domestically manufactured devices. The discussion covered the tax structure for Completely Built Unit (CBU) and Completely Knocked Down/Semi Knocked Down (CKD/SKD) imports, based on assessed values, referencing provisions from the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990.
Key details emerged regarding statutory exemptions, such as those for mobile phones imported by blind individuals and under personal baggage rules. Sales tax rates were noted to range from 18% to 25% ad valorem, depending on the device's value and classification. Notably, imported phones priced above $500 face a total tax burden of approximately Rs76,000, equating to an overall tax rate of 54 percent. For devices in the $700 to $750 range, the tax rate escalates to about 55 percent.
Disparities in Tax Rates and Committee Concerns
Officials highlighted a significant disparity: imported mobile phones are taxed at 54 percent of their value, while locally manufactured or assembled phones benefit from a reduced rate of around 25 percent. Additionally, an 18 percent general sales tax (GST) applies to mobile phones, alongside concessional income tax and a withholding tax of roughly Rs11,500 on high-end devices. Federal Board of Revenue (FBR) representatives indicated that there is currently no room to reduce the existing 18 percent GST or withholding tax.
Chairman Syed Naveed Qamar expressed dissatisfaction, noting that income tax is being treated similarly to sales tax. He directed the Tax Policy Office to conduct a thorough review and provide a comprehensive written note. This note should detail the rationale, revenue impact, and policy objectives behind the current tax rates on imported and locally manufactured mobile phones, with a focus on CBU and CKD/SKD categories.
Recommendations for Tax Reform and Legislative Actions
The committee recommended a review of the prevailing taxation structure to ensure equity, enhance consumer affordability, and encourage local manufacturing. It also called for an examination of the adequacy of existing exemptions under the Income Tax Ordinance, 2001, and the Baggage Rules, 2006.
In other legislative matters, the committee unanimously recommended the passage of several bills by the National Assembly as amended. These include "The Special Economic Zones (Amendment) Act, 2026" (Government Bill), "The Parliamentary Budget Office Bill, 2025" (a Private Member's Bill moved by Rana Iradat Sharif Khan, MNA), and "The Export Import Bank of Pakistan (Amendment) Bill, 2026" (Government Bill).
Additionally, the committee deferred consideration of multiple bills for its next meeting. These deferred bills are "The Netting of Financial Arrangements Bill, 2025" (Government Bill), "The Fiscal Responsibility and Debt Limitation (Amendment) Act, 2026" (Government Bill), "The Financial Institutions (Recovery of Finance) Amendment Act, 2026" (Government Bill), and "The National Counterfeit Currency Control Authority Bill, 2026" (a Private Member's Bill moved by Ms. Shahida Rehmani, MNA). The committee also approved the minutes of its previous meeting unanimously.
In a separate development, Saudi Arabia has announced an additional $3 billion deposit for Pakistan, underscoring ongoing financial support between the two nations.
