Abnormal increase in tax on import of mobile phones – Pakistan

According to the Sales Tax Act 1990 issued by the Federal Board of Revenue (FBR), 25% sales tax will be levied on the import of mobile phones worth more than $500 per set.

FBR has issued updated Sales Tax Act, 1990 and Federal Excise Act, 2005 till 30th June 2024 to incorporate the amendments made by Finance Act, 2024 in Sales Tax/Federal Excise Laws.

It should be noted that CBU mobiles refer to assembled mobiles that are ready for use. Many mobiles are imported as CBUs to countries like Pakistan where they have no manufacturing. It should be noted that the federal government imposes heavy customs duty on CBUs (mobiles and vehicles).

The FBR on Wednesday released the amended Sales Tax Act, 1990 and the Federal Excise Act till June 30, 2024. According to the latest Sales Tax Act, on import of mobile phones or satellite phones, a sales tax of 25 percent of the import price (exceeding USD 500) per set, or equivalent value in rupees in case of supply by the manufacturer, is levied. will

25% sales tax will be applicable on mobile phones in complete build-up (CBU) condition at the time of import or registration (IMEI number by CMOs). However, an 18 percent sales tax will be levied on imported CBU phones priced below USD 500.

Proposal to increase tax on imported mobile phones in the federal budget

It may be noted that under the Revised Sales Tax Act, the FBR has established a Tax Fraud Investigation Wing, Inland Revenue. Tax Fraud Investigation Wing Inland Revenue will also be tasked with preventing, analyzing and investigating tax fraud.

Tax Fraud Investigation Wing Inland Revenue shall consist of Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit or any other unit as notified by the Board. can be notified through

How much worth of mobile phones were imported during the last 10 months, the report presented

Note that SKD stands for semi-built unit. SKD mobiles or vehicles are partially assembled in another country, then transported to a country where they are fully assembled once before being sold. International manufacturing companies import these mobiles or vehicles partially made with its components and assemble them here in Pakistan.

CKD stands for “Completely Locally Manufactured Unit”. A mobile or vehicle that is locally assembled in the country. However, parts, engines, electronics and other important components are imported from the country of origin. This means that the manufacturing company has to complete all the steps themselves before handing over the mobile or vehicle to the customer. The advantage of doing so is lower tax on cars or mobiles. Thus foreign manufacturers are encouraged to set up plants and manufacture cars or mobiles locally.