Telecom Imports Drop due to Tax Rise

With introduction of next generation technology, last year telecom sector of Pakistan strengthened to great extend taking the whole industry to great heights. However, after the imposition of recent taxes has started to stifle that growth  as the mobile handset imports fell by 8.49% in the first two months of current fiscal.

In recent budget for fiscal year 2015-16, the government  doubled the custom duty on imported   from 5% to 10% whereas taxes on mobile phone imports were also doubled as general sales tax (GST) that was earlier Rs 150, 250 and 500 on lower, middle, and higher end mobile phones respectively, is now Rs 300, 500 and 1,000 for the same categories of handsets. However, on the other hand, Rs 200 import duty on every mobile phone was abolished.

Telecom Imports Drop due to Tax Rise

According to the latest figures made available by the Pakistan Bureau of Statistics (PBS), the total telecom imports, registering 31% decline, stood at $193.23 million in first two months of FY15 as compared to the $279.22 million of value that stood in the corresponding period of last fiscal. Similarly, the telecom apparatus and accessories’ imports went down by 46.45% in the said period to $105.38 million as against $164.18 million in similar period of FY15. Mobile phone imports also saw a dip as in the period of July to August 2015, $105.38 million worth of mobile phones were imported while during the same period in 2014 total $115.16 million worth of mobile handsets were imported by the consumers.

The overall impact on customers has also been negative since importers are left with no choice but to pass the increased cost on them. It will also gravely effect the economy in the long run by discouraging foreign companies that are looking to move in to Pakistani market.