Pakistanis hoping for cheaper imported smartphones will have to wait.
A proposal to cut PTA mobile phone taxes from 25% to 18% will not feature in the upcoming federal budget, sources familiar with the matter confirmed.
The existing tax structure requires mobile phones brought into Pakistan, whether imported commercially or carried by overseas Pakistanis, to pay applicable duties within a limited period or face device blocking. Smartphones priced above $500 currently attract a regulatory duty of around 25%, on top of customs duty, sales tax, withholding tax, and mobile levies.
A PRIME report published on May 26 found the total effective tax burden on a $700 smartphone reaches 50.26%, making Pakistan one of the most expensive markets for premium devices in the region.
The proposed revision aimed to bring the regulatory duty rate down to a flat 18% across all price tiers. Advocates argued the change would ease the burden on overseas Pakistanis visiting home, reduce smartphone prices for local consumers, and curb the grey market.
PTA blocked nearly 100 million unauthorized devices in FY2024-25, a figure that reflects how high taxation drives demand for unregistered and smuggled phones.
Why the Proposal Failed
Despite backing from lawmakers and policy researchers, the proposal ran into resistance from the local mobile assembly industry. Domestic assemblers including Airlink and LMC benefit directly from the current tax structure, which makes fully imported devices significantly more expensive than locally assembled alternatives. Approving the cut would have eroded that competitive advantage.
The National Assembly Standing Committee on Finance had earlier directed the Federal Board of Revenue and PTA to compile a detailed report on current tax rates, policy options, and international comparisons. That report was due in March 2026. The budget decision suggests its findings did not produce enough momentum for reform this cycle.
According to market assessments, the PTA tax cut proposal is expected to face resistance when the federal budget is announced next week, reflecting the government’s limited fiscal space and pressure to meet IMF-linked revenue targets.
Analysts say lowering PTA taxes could disrupt the local mobile assembly industry, which has expanded rapidly under the current policy framework. Companies such as Airlink and Lucky Motor Corporation benefit from higher duties on fully built imported units, which encourage local assembly and reduce competition from international brands.
Pakistan’s mobile subscriber base crossed 225 million connections as of January 2026. Telecom sector revenue also crossed Rs. 1 trillion in FY2024-25. Despite that growth, affordability constraints rather than infrastructure gaps remain the primary barrier to digital inclusion, according to the PRIME study.
