Tag: Mobile Phone Imports

Govt may freeze non-filers’ bank accounts for not responding to tax notices

The government is contemplating new measures to enforce tax compliance and amend taxation policies as part of the amended Finance Bill 2024.

Among the key proposals is the potential blocking of bank accounts for non-filers of tax returns, and changes to the sales tax on mobile phone imports.

According to informed sources, the proposal to freeze bank accounts of non-filers was initially included in the original Finance Bill 2024 but was not passed. Under the new plan, if non-filers do not respond to tax notices, their bank accounts may be blocked until they are listed on the Active Taxpayers List (ATL).

Non-filers would still be able to deposit money into their accounts but would be prohibited from withdrawing funds until they comply with filing requirements and their names appear on the ATL.

The Federal Board of Revenue (FBR) will issue an income tax general order (ITGO) listing the names of non-filers whose accounts are to be blocked if this proposal is incorporated into the amended Finance Bill 2024.

Additionally, the amended Finance Bill 2024 proposes replacing the current 18 percent sales tax on imported mobile phones with a fixed sales tax amount, which will vary depending on the brand of the imported phones.

The government is also revising the policy on disallowance of sales promotion and advertising expenses. In the 2024-25 budget, 25 percent of these expenses under royalty arrangements were disallowed. The government is now considering three options to amend this policy.

Firstly, the FBR may reduce the disallowance rate from 25 percent to 20 percent, subject to specific conditions being met. Secondly, the FBR could restore the original status of the law prior to the Finance Bill 2024, which would grant the FBR the authority to create rules for handling such cases.

Lastly, the government might permit a certain percentage of sales promotion and advertising expenses to be allowed.

These proposed changes aim to improve tax compliance and adjust tax policies to better suit economic conditions and business needs. The final decisions will be confirmed once the amended Finance Bill 2024 is formally presented and approved.

June 26, 2024
Pakistan’s mobile phone imports skyrocket, surpassing $987 million in first half of FY 23-24

Pakistan has witnessed a remarkable surge in mobile phone imports, reaching $987.539 million during the first half (July–January) of the fiscal year 2023–24.

This marks a substantial growth of 138.08 per cent compared to the same period in the previous fiscal year, where imports totaled $414.800 million.

The data, released by the Pakistan Bureau of Statistics (PBS), underscores the country’s increasing reliance on imported mobile devices.

In January 2024 alone, Pakistan’s mobile phone imports rose by 10.70 per cent on a month-on-month basis, totaling $194.928 million, compared to $176.093 million in December 2023.

Year-on-year comparisons reveal an even more staggering growth of 275.15 per cent in January 2024, compared to $51.960 million in January 2023.

The overall telecom imports into Pakistan during July–January 2023–24 amounted to $1.243 billion, showcasing a robust 93.06 per cent growth compared to the same period in the previous fiscal year.

Year-on-year, the growth in overall telecom imports stood at an impressive 197.07 per cent, reaching $232.709 million in January 2024, compared to $78.336 million in January 2023.

Despite challenges faced by the local manufacturing sector, including a decline of around four per cent in local manufacturing and assembling of mobile handsets during the calendar year 2023, commercial imports of mobile handsets increased.

Official data revealed that local manufacturing plants produced 21.28 million mobile handsets in 2023, compared to 21.94 million in 2022 and 24.66 million in 2021. However, commercial imports rose from 1.53 million in 2022 to 1.58 million in 2023.

Moreover, of the locally manufactured and assembled mobile handsets in 2023, 13 million were 2G devices, and 8.28 million were smartphones.

According to the Pakistan Telecommunication Authority (PTA), 59 per cent of mobile devices in Pakistan are smartphones, while 41 per cent are 2G devices.

Despite the challenges faced by the local manufacturing sector, the significant growth in mobile phone imports underscores Pakistan’s increasing reliance on imported devices, contributing to the country’s evolving telecom landscape.

February 18, 2024
New tax rules: Discounts for overseas Pakistanis, higher costs for importers

In a recent development, commercial importers of new mobile phones are set to miss out on any concessions following the issuance of the new valuation ruling.

Conversely, a significant benefit has been extended to incoming international passengers, particularly overseas Pakistanis, who can now avail themselves of a depreciation of up to 60 per cent on used or refurbished mobile phones.

The Directorate of Valuation Karachi’s latest ruling, numbered 1834 of 2023, is positioned to ease processes for overseas Pakistanis.

However, it paints a different picture for commercial importers dealing with new mobile phones, who are now obligated to pay duties and taxes based on relatively higher customs values.

The new ruling encompasses several additional models to refine the assessment of duties and taxes.

Regrettably, the ruling does not offer any respite for commercial importers, placing the onus on them to adhere to the heightened customs values.

In contrast, overseas Pakistanis stand to benefit from the increased depreciation rates outlined in the ruling, reaching up to 60 per cent for phones up to five years old brought in by incoming international passengers.

Under the provisions of the new ruling, customs values for used or refurbished mobile phones imported by legitimate passengers will be assessed, considering the allowance for depreciation as stipulated in the provided tabulated values.

For brands and models imported in commercial quantities but omitted from the annexure, clearance collectorates are advised to assess them under Section 81 of the Customs Act, 1969.

Subsequently, a reference should be forwarded to the Directorate for the final determination of their values, according to the ruling.

Sources indicate that overseas Pakistanis will find relief in the ruling due to the augmented depreciation rates, offering a substantial advantage for phones up to five years old.

Meanwhile, commercial importers are left without any reprieve, as the new models of mobile phones will incur higher prices compared to their less-aged counterparts.

This policy aims to curtail under-invoicing margins for both existing and new models of branded mobile phones.

December 19, 2023