Mobile Phone Imports Decline by 18 Percent As Sales Tax Doubled

Mobile phone imports in Pakistan registered massive decline of over 18 percent in the first four months (July-October) of the current financial year as compared to the same period of last year, after the government has doubled sales tax for medium and high category/smart phones import.

According to the latest data released by the Pakistan Bureau of Statistics (PBS), mobile imports registered over 25 percent decline in the month of October and remained at $51,636 against $69,596 during the same period of last year.

According to the PBS, total imports of mobile phone stood at $198,198 in the first four months of current fiscal year 2016-17 against $242, 456 during the same period of last financial year.

Analysts are terming the heavy taxation as one of the main reasons behind the negative growth in mobile import. The government has doubled sales tax i.e. from Rs 500 and 1000 to 1000 and 2000 respectively for medium and high category/smart phones on the import of mobile phone sets in budget (2016-17). The outcome in this regard has automatically been passed on to the consumers; directly hitting mobile phones imports and rates.

The increase on phone imports by the government may discourage imports through proper channels and result in increase in smuggling, which is evident from the latest figures released by PBS.

Overall telecom imports saw decline of over 14 percent during July-October 2016 compared to the same period of last year. Total imports were recorded at $381,989 during this period compared to $449,018 in July-October 2015, while registered 23.44 percent decline as compared to $136,229 during October 2015 as it is $104,295 in October 2016.

Other telecom apparatus import also witnessed significant decline of over 11 percent during the first four months of current financial year as it stood at $183,791 against $206,562 during the same period of last year. When compared to the October 2015 other telecom apparatus imports registered 20 percent decline as it was $52,659 compared to $66,633 in October 2016.

  • I recently did a comprehensive report on the Pakistan IT and Telecom market. One major segment was the market for mobile phones and its growth. With the numbers given to me (official and unofficial) it was clear that the Government its own worst enemy.

    There was a direct correlation to the phones smuggled to every time the Duties and Taxes were raised. The distributors had given many detailed suggestions but, as is usual, none were accepted and the pressure of the Finance Ministry to blindly screw the people by raising taxes on everything that they can, has been self defeating.

    It is obvious to all,but those who are not willing to read the market and data. One suspects that someone may be actually complicit with the smuggling mafia! I am not sure that is true, but there is no other explanation.

    All this hurts the people, the market, the industry and most of all the growth of the country.

    • Like i have said before this analysis is balony. Customers who can pay 60,000 for a phone dont care that they now have to pay 61,000. Customers of high end phones are not price sensitive. You have to calculate whether the reduced imports with double tax rate actually resulted in reduced net tax collected for the government or not.

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