The government has introduced regulatory duty in flat rates for six different slabs according to import value of mobile phones in a move to lower tax on ordinary sets as compared to those having higher prices.
The regulatory duty on import of mobile phones valuing up to $30 will now be charged at a flat rate of Rs180 per set as against the earlier Rs250, while it will be charged at the rate of Rs18,500 on import of mobile phones valuing more than $500 per set.
Previously, the regulatory duty on import of mobile phones valuing up to $60 was Rs250 per set, while it was 10 per cent and 20pc of the import value for those with a price ranging between $60 and $130 and those valuing more than $130, respectively.
The change in the regulatory duty structure made through the Finance Supplementary (Amendment) Bill 2018 will help in collection of maximum revenue by facilitating fair assessment of mobile phones at import stage.
The import of mobile phones came under strict regime following reports of duty free imports in passenger baggage and its subsequent selling in open market. To check this as well as smuggling of mobile phones, the government introduced a separate mechanism of duty payments for registration.
Earlier in May 2018, the Pakistan Telecommunication Authority had launched the Device Identification, Registration and Blocking System mechanism to counter rampant smuggling of substandard and used phones into the country.
The government through a notification (SRO327 of 2019) introduced six slabs for regulatory duty on import of mobile phones with immediate effect.
Mobile phones having an import value between $30 and $100 will be charged at the rate of Rs1,800 per set, while the regulatory duty on import of sets valuing between $100 and $200 will be Rs2,700. The import value of mobile phone less than $350 per set but more than $200 will attract Rs3,600 regulatory duty per set.
If import value of a mobile phone ranges between $350 and $500, the duty will be charged at a flat rate of Rs10,500, while the regulatory duty will be Rs18,500 per set if a mobile phone has import value of more than $500.
Official believe the flat rates for each slab were worked out in a way to remove ambiguity in imposition of regulatory duty on import of mobile phones irrespective of their prices.
In 2017-18, Pakistan’s legal import value of mobile phones reached $847.656 million in 2017-18. Earlier when there was no duty under a free trade agreement with China, or a very negligible duty applicable from other countries, the imports had crossed the $1bn mark. The government recently revised the duty structure and imposed regulatory duty on import of mobile phones, which resulted in a drop in the legal import with a subsequent rise in their smuggling.
The regulatory duty had been introduced on luxury items a few years ago to maintain the stability of the current account position, and competitiveness of the domestic manufacturers. It was also an attempt to encourage import substitution of these items.