Whopping Taxes Put Mobile Phone Industry in Crisis

The  increasing taxes on the import of mobile phones has already pushed out a lot of players from the market. The Associations that deal with import of these devices such as KEDA, APMPI, PEMA, Lahore/Karachi & Islamabad Electronics Dealers Associations fear that the whopping taxes has put mobile phone import in crises already and fear that the new budget may see further taxation that will destroy the industry.  The upcoming budget for the fiscal year 2016-17 is being announced later this week and has industry associations dealing with mobile phones worried over increasing taxes at each budget. These mobile phone industry associations have already appealed to the Government of Pakistan for reducing taxes for providing some relief to save it from collapse.

Whopping Taxes Put Mobile Phone Industry in Crisis

Last week, Syed Khurshid Shah chaired the meeting of the committee which took notice of the taxes against cellular companies. The FBR Chairman also suggested that the Board is going to introduce forensic audit of cellular companies during this financial year. The forensic audit would be for the verification of the claims of the telecom operators that they are paying more taxes in Pakistan than anywhere else in the region. FBR Chairman also enlighted PAC Chairman Syed Khursheed Ahmed Shah that there was 14 percent direct tax on telecom services whereas provinces were collecting 18.5 percent sales tax.

The mobile phone industry claims that they are already heavily taxed and in every budget perpetual increase in the taxes can be observed. The imposition of further tax increase from the government can push industry towards crisis is the prediction made by the mobile phone industry investors. Mobile phone industry has made an appeal to the President, Prime Minister, Finance Minister and the FBR Chairman Nisar Muhammad khan to facilitate the industry by giving suitable relief on current duties and tax structure on the import of mobile phones in the upcoming budget. They also have made the list which will be the result of increasing the tax in the upcoming budget.

• Substantial increase in the illegal/grey traffic of mobile handsets.
• Worsening of law and order situation due to illegal/grey traffic of products procured from different regions.
• Unqualified misery to the lives of mobile phone importers.
• Downsizing in the sector resulting in a significant contribution towards the menace of unemployment.
• Burden on the buying power of the consumer against each purchase of a mobile handset.
• A significant decline in revenue paid in shape of duty and taxes by importers.
• Deterioration of the quality of operators due to an influx of alien products instead of proper pre-tested and official distribution stocks.

Hopefully, the Government of Pakistan will rationalize the taxation regime to save the mobile phone industry from further deterioration or collapse.