Govt Imposes Fixed Taxes on Imported Mobile Phone Kits and CBUs

The federal government has imposed a fixed tax rate up to Rs. 5,200 per kit on the import of mobile phone assembly kits. For mobile phones valued up to $30, the tax is set at Rs. 70 for Completely Built-Up (CBU) units. For all phones exceeding $30 and up to $100 in value, the fixed tax is Rs. 100 for CBU and zero for CKD/SKD. Phones valued between $100 and $200 will come with a fixed tax of Rs. 930 per kit in CBU condition, while those valued between $200 and $350 will face a tax of Rs. 970 per kit. For phones valued between $350 and $500, the tax rises significantly to Rs. 5,000 for CBU and Rs. 3,000 for CKD/SKD units. The highest tax rate applies to phones valued at more than $500, with a fixed tax of Rs. 11,500 in CBU condition and Rs. 5,200 for CKD/SKD condition. The federal government has proposed an 18 percent sales tax on the import of mobile phone assembly kits and the local supply of mobile devices, as outlined in the recent budget speech. This measure is expected to enhance revenue by Rs. 33 billion in the fiscal year 2024-25. In the previous fiscal year, the fixed tax rate on the import of mobile phone assembly kits ranged from Rs. 10 to Rs. 9,270 per kit, depending on their price. However, the new proposal introduces a uniform 18 percent tax. According to the Finance Bill 2024, the sales tax on smartphone imports and IMEI registration is now set at 25 percent ad valorem for smartphones valued above $500. This means that all high-end and premium smartphones will be subjected to this higher tax rate. However, this 25 percent rate only applies to fully assembled smartphones valued above $500. Handsets that are yet to be assembled or are partially assembled will continue to be taxed at an 18 percent rate, even if their value exceeds $500. The same applies to locally manufactured and supplied smartphones.