Government has yet to remove fixed sales taxes on local smartphone production

Despite the aim to implement changes within the smartphone market, the government has yet to implement a majorly approved recommendation of the Mobile Device Manufacturing Policy for the removal of fixed sales tax on CKD/SKD manufacturing of mobile devices i.e. about $200.

Concerns were raised regarding the future implementation of this policy to which the Ministry responded that all approved recommendations regarding the respective policy have been implemented apart from the fixed Sales Tax one which would be implemented soon.

In addition, the Ministry mentioned that the Division had forwarded the non-implementation at a vide summary on the 4th of December 2020 to the ECC which in Case No. ECC-452/ 61/ 2020 dated 16-12-2020 was approved.

In a nutshell, what this means is that locally manufactured phones that are valued more than $200 shall face the removal of sales tax once the respective direction with the proper modalities has been by the Ministry of Industries and Production while keeping the Finance Division, Federal Board of Revenue (FBR), and relevant stakeholders in the loop as consulters.

However, the FBR has maintained the gap between the CBU and duty in flat rates for six different slabs according to the import value of the cellphones vide FBR SRO 840(I)/2021 dated June 30, 2021, which has further encouraged local smartphone manufacturing.