A report by the Policy Research Institute of Market Economy (PRIME) has found that Pakistan’s taxation structure has significantly increased the cost of smartphones, with an effective tax burden of 50.26 percent on a $700 mobile phone.
The study, titled “Taxing Connectivity: How Taxes and Tariffs Deepen Pakistan’s Digital Divide,” states that a smartphone valued at around Rs. 196,000 internationally costs nearly Rs. 294,500 in Pakistan after the addition of regulatory duties, sales tax, mobile levies, and withholding taxes.
The report argues that high taxation is making Pakistan one of the most expensive markets for premium smartphones in the region and is limiting access to digital tools.
According to the findings, Pakistan’s digital gap is driven more by affordability constraints than infrastructure limitations. While around 81 percent of the population lives in areas covered by 3G and 4G networks, only 29 percent actively use the internet, leaving a usage gap of 52 percent.
Researchers attribute this gap primarily to high taxes on mobile devices and telecom services, which they say place smartphones and connectivity beyond the reach of lower-income groups.
The report also highlights that Pakistan’s telecom sector is subject to multiple layers of taxation, including advance income tax, federal excise duty, and provincial sales tax, resulting in a combined tax burden of around 42 percent of operator revenues. It warns that this reduces investment capacity and slows expansion of broadband and next-generation networks.
On mobile manufacturing policy, the study notes that despite attracting investment of around $300 million and creating over 60,000 jobs, local assembly has achieved less than 10 percent localization against a target of 49 percent. Most production still depends on imported kits and components.
The report further warns that high taxation is contributing to a growing grey market for smartphones, including cloned and illegally modified devices. It notes that the Pakistan Telecommunication Authority (PTA) blocked nearly 100 million unauthorized devices during FY2024–25.
PRIME recommends replacing the existing tiered tax structure with a uniform 18 percent sales tax on imported smartphones, arguing that reduced taxation could improve affordability, curb smuggling, and help bridge Pakistan’s digital divide.
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It seems that IMF is blind to all this. Why can’t they see all this or they themselves are a party to our corrupt system. These rulers have no shame. Circular debt never ends, as a matter of fact, it keeps on growing. First it was only power circular, now it is gas circular also. This is broad daylight robbery and poor Pakistanis (feel ashamed to call them that) as it seems they are also complicit, otherwise people should stand up and play havoc and hold the rulers accountable
Imf is not govt. It’s the lender. It can only give proposals to get economy on track. It’s govt that makes policies.
Imf openly told govt to increase taxes on the richest. The govt declined. What are they supposed to do ?
Call center currently pay less then 1 percent tax. While you and I pay over 10 percent to 18 percent on everything we buy.
Oh no …. in other news. Sky is blue .