Prices of imported mobile phones likely to go up

KARACHI: The Federal Board of Revenue (FBR) plans to replace the fixed sales tax regime with the normal regime on import of mobile phones, which will generate sizeable revenue for the government and encourage the sale of locally-manufactured mobile phones, sources said on Wednesday.

To apply the normal sales tax regime at 17 per cent, the revenue board will make recommendations through the finance supplementary bill, which will be tabled before the Parliament for approval.

The supplementary finance bill is the part of conditions attached to release of $1.065 billion tranche by the International Monetary Fund.

The government has to get approval of the supplementary bill from the Parliament for the removal of Rs350 billion exemptions and concessions.

The sources said the apex tax body had proposed to withdraw the fixed tax regime on the import of completely built unit (CBU) mobile phones.

At present, the sales tax on import of CBU mobile phone is mobile phone not exceeding $30, excluding smartphone, Rs130; not exceeding $30 (smartphones), Rs200; exceeding $30 but not exceeding $100, Rs200; exceeding $100 but not exceeding $200, Rs1,680; exceeding $200 but not exceeding $350, Rs1,740; exceeding $350 but not exceeding $500, Rs5,400; and exceeding $500, Rs9,270.

The sources said the prices of imported CBU mobile phones would witness a significant increase if amendments were made to the law.

Citing an example, the sources said, the sales tax on a $501 mobile phone is currently charging sales tax of Rs9,270. After the elimination of the fixed tax regime, the sales tax would almost double to Rs15,000.

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