According to some media reports, the government of Pakistan is looking to increase the tax duty on imported phones by a whopping 44-54%. The tax hike on tax duty is not official and is yet to be confirmed by the government.
The duty tax, which was previously set at 15%, will now be increased three times, a decision that has left both the customer and the seller confused and frustrated. The president of Electronic Dealers’ Association (EDA), Mohamad Rizwan on this occasion said that the decision by the government will have serious repercussions on the smartphone-consumer market. He further said that the newly implemented tax duty will raise the price of smartphones by as much as Rs.20,000.
According to Electronic Dealers’ Association (EDA), the government has doubled the income tax, GST, duties, and levies on imported smartphones. Other than this the federal government has also imposed a “Type Approval” condition on the imported phones. This is disappointing news for both the smartphone business owners and general consumers in Pakistan.
The new taxes will drastically hamper the sales of smartphones in Pakistan which will leave the seller extremely worried, however, the consumer will also be at the receiving end of all of this fiasco as the budget phones and low-tier budget phones will now be much less affordable for the common man.
Pakistan following India’s footsteps without the required pre-requisites
This decision to almost triple the import duty on a smartphone would make sense if Pakistan had some sort of a local smartphone manufacturer or some big multi-national company locally assembling their smartphone in the country. Since there is no company producing locally manufactured smartphones, people are forced to buy imported smartphones with a much much higher price tag because of the exaggerated taxes.
India was the first to experiment with this model of increasing duties to encourage local industry, but it needs to be pointed out that there was already a budding local smartphone industry in India with companies like Micromax and Lava who were already gearing up to manufacture smartphones in India.
Furthermore, in a bid to promote the “Make in India” initiative, the Indian government recently changed its policy where it increased taxes on imported smartphones while providing more incentives and relaxing taxes on foreign companies that wanted to locally assemble their phones in India.
Pakistan, on the other hand, seems to be following in India’s footsteps, but without first promoting local manufacturing. Unfortunately, Pakistan has no smartphone manufacturer who is locally producing smartphones. QMobile, which is considered one the biggest local smartphone brand, also sells imported phones from China after re-branding and re-packaging the imported units.
In December 2018, the government of Pakistan announced their new policy for the imports of smartphones in a bid to curb the smuggling of these phones in Pakistan from around the world. The government’s new policy had some strict conditions and was therefore met with a lot of criticism and concern. However, Syed Zulfikar Hussain Bukhari responded to the criticism by ensuring the people that he met with the government officials and personally requested the Minister of State for Revenue Hammad Azhar to lower the tax and to also allow at least two duty-free phones instead of one.
Let’s see how things proceed in 2019, but considering the strict government policies that are coming to light, it’s not wrong to assume that smartphones in Pakistan are about to become a lot more expensive.