ISLAMABAD: Mobile phone users in Pakistan are paying taxes exceeding 55% of a handset’s price, a burden lawmakers have termed irrational, counterproductive, and reflective of “narrow-minded policymaking” that prioritises revenue over digitisation.
During a meeting of the National Assembly Standing Committee on Finance, members criticised the Federal Board of Revenue (FBR) for imposing excessive duties on smartphones—now a necessity, not a luxury. FBR Member Customs (Operations) Shakil Shah informed the panel that taxes are applied across six price bands, from $30 to over $500.
For phones valued above $700, the tax load includes:
- Rs16,000 mobile levy
- Rs22,000 regulatory duty
- Rs11,500 withholding tax
- 25% sales tax on the value inclusive of taxes
These four taxes alone brought in Rs18 billion last fiscal year. Overall, the FBR collected Rs82 billion from mobile phones—just 0.7% of total tax revenue.
Committee Chairman Syed Naveed Qamar remarked that the economy could not be “held hostage” for a small revenue gain. MNA Sharmila Faruqi highlighted the impact on ordinary consumers, noting she had not activated her Rs370,000 phone because it required Rs190,000 in registration taxes.
Lawmakers stressed that high levies contradict Prime Minister Shehbaz Sharif’s digitalisation agenda, especially as smartphones have become essential for daily life. MNA Ali Kasim Gilani said that consumers were effectively being penalised for using modern technology, urging the FBR to rationalise the tax structure.
The committee directed the FBR to conduct a complete review of mobile phone taxation, assess its impact on smartphone adoption, and submit recommendations by mid-March for inclusion in the next budget. Former foreign minister Hina Rabbani Khar also questioned the rationale behind the steep duties.
According to the briefing, both new and refurbished phones brought by overseas passengers are taxed under defined slabs in the Customs Tariff. Where no valuation ruling exists for a model, duties are assessed based on 90-day import data. Sales tax stands at 18% for phones valued up to $500 and 25% for those above.
PTA Chairman disclosed he himself paid Rs163,000 in taxes on his handset, adding that though 60% of locally assembled phones are smartphones, only 2% are 5G-enabled—despite plans for a 5G auction in February.
FBR officials also noted a nearly 50% arbitrage favouring local assemblers, who pay just 6% tax compared to more than 55% on imported phones.
