Pakistan’s 18% tax proposal on mobile phone parts raises concerns, risking to hinder industry growth despite strong local assembly.
The Pakistan Mobile Phone Manufacturing Association (PMPMA) strongly opposes the proposed tax hike, contending that it would escalate mobile phone prices, particularly impacting individuals with lower incomes.
For instance, smartphone usage among Bykea riders, who rely on these devices for their livelihoods, could become financially burdensome with increased prices.
Moreover, the tax may impede the country’s transition to advanced technologies such as 3G and 4G. Presently, around 40% of mobile users in Pakistan still utilize 2G phones, lagging behind the usage trends in developed nations. Thus, Pakistan’s technological advancement could suffer if affordability barriers to newer phone models arise from higher taxes.
Despite the revenue intentions behind the proposed tax, alternative sources such as taxes on SIM cards already contribute substantially to government income. This suggests that imposing additional taxes on mobile phones may not be the most prudent approach.
PMPMA Negotiations with FBR :
In a meeting with the Federal Board of Revenue (FBR), the PMPMA stressed the importance of honoring government commitments to investors and avoiding tariff increases on mobile phones. They cautioned that heightened tariffs could disrupt localization efforts and jeopardize Pakistan’s mobile phone export objectives.
In conclusion, while the government seeks to boost revenue, it must consider the broader repercussions of its tax proposal. The PMPMA urges the government to reassess its plan and explore strategies to bolster local manufacturing without excessively burdening the public with smartphone costs.