The smartphone manufacturing sector is one of the top five markets in the world, with an estimated sales revenue of Approximately 522 billion in CY 2019, and yearly sales of even more than six billion units. According to data published by the Pakistan Telecommunication Authority, China has become the worldwide center of phone production since 2010, with annual shipments of more than USD 150 billion (PTA). In latest years, it has been observed that smartphone manufacture is shifting away from China as a result of rising factor (labor) prices in China as well as trade disputes with the United States.
Regarding the need to make adjustments in the mobile industry, the government has yet to execute a largely accepted suggestion of the Smartphone Production Policy for the abolition of a $200 fixed sales tax on CKD/SKD mobile device production.
Government has yet to Discontinue Fixed Sales Taxes On Local Smartphone Manufacture
Concern exists about the upcoming implementation of the plan, to which the Ministry answered that all authorized suggestions for the related policy had been executed, with the exception of the fixed Sales Tax, which will be implemented shortly.
Furthermore, the Ministry stated that the Department sent the non-implementation at a video summary on the 4th of December 2020 to the ECC, which was accepted in Case No. ECC-452/ 61/ 2020 dated 16-12-2020.
In simple terms, this implies that domestically made smartphones worth more than $200 will be exempt from state taxes once the Ministry of Industries and Manufacturing has issued the appropriate direction with the necessary modalities while preserving the Finance Division, Federal Board of Revenue (FBR), and key parties in the loop as consultants.
Furthermore, in FBR SRO 840(I)/2021 dated June 30, 2021, the FBR has kept the difference between both the CBU and duty at fixed rates for six distinct slabs based on the trade balance of the smartphones, which has further supported local smartphone manufacture.
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