ISLAMABAD – Despite a government drive to regularize device imports and boost revenue through taxes, Pakistan’s heavy taxation policy on high-end mobile phones, such as iPhones, appears to be counterproductive, pushing consumers towards a booming grey market and unregistered usage.
Since January 2019, the Federal Board of Revenue (FBR) has collected a substantial Rs87 billion from individual mobile phone registrations. While high-end imported phones, like those from Apple, are theoretically significant revenue generators due to higher import tariffs, registration data tells a different story.
Disparity in Device Registration
A breakdown of official registrations reveals a striking disparity: iPhones (Apple), despite their market value and prominence, account for the smallest share of officially registered devices among major brands.
| Brand | Share of Registered Devices |
| Nokia | 40% (Mostly Feature/Low-Cost Phones) |
| Samsung | 19.7% |
| iPhone (Apple) | 19.4% (Smallest Share) |
Nokia, a brand largely associated with feature phones or low-cost smartphones, dominates the registration charts. In contrast, iPhones, among the most expensive devices, have the smallest official share, even though Apple holds a significant overall market share by value (around 16.5% by shipment volume in early 2024).
This substantial discrepancy strongly suggests that a considerable number of high-end phone users are actively evading the official registration process—which is mandatory via the PTA’s Device Identification, Registration, and Blocking System (DIRBS)—by resorting to unregistered usage, IMEI cloning, and purchasing through unofficial channels.
Critics argue that the statistics suggest excessive taxes on premium phones are shrinking compliant registrations and inadvertently propelling the grey market.
Tax Policy Under Fire
The core issue lies in Pakistan’s multi-tiered tax structure, which applies taxes based on a device’s value. This results in significantly higher charges for premium phones, making mandatory registration through DIRBS a less attractive option for high-end consumers.
For a device priced above $500, a consumer must pay Rs27,600 plus 17% sales tax if registered on a passport, or a higher Rs37,007 plus 17% sales tax if registered on a CNIC. This makes high-end devices substantially costlier in Pakistan.
As a result of this tax regime, users seeking premium phones are driven to the grey market, where they often use devices unregistered with local SIMs for 60 days before switching, use Wi-Fi exclusively, or employ illicit practices like IMEI cloning to bypass the protocol.
Parliamentary Push for Tax Review
The data has triggered calls for a review of the current tax policy from stakeholders and within the government.
Kasim Gilani, a National Assembly member, has emerged as a key campaigner, lobbying against what he terms “excessive” and “unjust and unaffordable” import taxes on smartphones. He argues that modern, high-end devices are a necessity for the youth and the country’s burgeoning IT sector, not a luxury.
“I paid half a million rupees in tax on just two phones, almost as much as I paid for my car registration,” the lawmaker stated, elaborating on his own experience with the excessive tax structure.
Gilani secured assurances from the government that a parliamentary committee will take up the issue next month to work toward a resolution. The National Assembly Finance Committee is expected to discuss the matter on December 3, with the FBR Chairman and relevant officials in attendance.
FBR’s Stance and Local Assembly
The FBR maintains that the tax measures have successfully encouraged local assembly, with over 95% of handsets now sold in Pakistan being assembled domestically.
However, the telecom sector is also pushing for tax cuts ahead of the anticipated 5G rollout, urging the government to first reduce taxes on raw materials. With Pakistan having 196 million mobile subscribers and only a small percentage of phones currently 5G-enabled, the PTA has advised the IT ministry to increase the availability of compatible devices to ensure a smooth transition to the new technology.
