The federal government has established a fixed tax rate of up to Rs. 5,200 per kit on the import of mobile phone assembly kits.
For mobile phones valued up to $30, the tax is set at Rs. 70 for Completely Built-Up (CBU) units. For phones valued between $30 and $100, the fixed tax is Rs. 100 for CBU units and zero for CKD/SKD units.
Phones valued between $100 and $200 will face a fixed tax of Rs. 930 per kit in CBU condition, while those valued between $200 and $350 will incur a tax of Rs. 970 per kit. For phones valued between $350 and $500, the tax escalates to Rs. 5,000 for CBU and Rs. 3,000 for CKD/SKD units.
The highest tax rate applies to phones valued above $500, with a fixed tax of Rs. 11,500 in CBU condition and Rs. 5,200 for CKD/SKD condition.
Furthermore, the federal government has proposed an 18 percent sales tax on the import of mobile phone assembly kits and the local supply of mobile devices, as highlighted in the recent budget speech. This measure aims to boost revenue by Rs. 33 billion in the fiscal year 2024-25.
In the previous fiscal year, the fixed tax rate on the import of mobile phone assembly kits ranged from Rs. 10 to Rs. 9,270 per kit, based on their price. The new proposal, however, standardizes the tax at 18 percent.
According to the Finance Bill 2024, the sales tax on smartphone imports and IMEI registration is now set at 25 percent ad valorem for smartphones valued above $500. This means that all high-end and premium smartphones will be subject to this higher tax rate. However, this 25 percent rate only applies to fully assembled smartphones valued above $500.
Phones that are yet to be assembled or are partially assembled will continue to be taxed at an 18 percent rate, even if their value exceeds $500. The same tax rate applies to locally manufactured and supplied smartphones.
This new tax structure aims to streamline the tax process and generate significant revenue for the government. The introduction of a uniform 18 percent sales tax on mobile phone assembly kits and the higher 25 percent rate for high-value smartphones reflect the government’s strategy to balance revenue generation with the promotion of local assembly and manufacturing. These measures are expected to impact both the import and local production of mobile phones, influencing market dynamics and pricing strategies within the industry.
