PTA Relief on $500+ Mobile Phones Not Likely This Year, Tax Rate to Stay At 25%

A proposal to reduce Pakistan Telecommunication Authority (PTA) mobile phone tax rates from 25 percent to 18 percent is unlikely to be approved in the upcoming budget.

Under the current PTA tax structure, mobile phones imported from abroad or brought in by overseas Pakistanis remain functional only for a limited period unless applicable taxes are paid.

High-end smartphones priced above $500 are currently taxed at around 25 percent.

The proposed revision suggested lowering the tax rate across the board to 18 percent to provide relief, particularly for Pakistani citizens visiting from abroad. However, the proposal is unlikely to be implemented this year.

If approved, the measure could negatively impact local mobile assemblers such as Airlink and LMC, which benefit from the existing tax structure that discourages fully imported devices.

In a separate policy discussion, tax harmonization across the IT and digital workforce has also been considered. The issue stems from disparities between salaried employees, who face tax rates of roughly 5–20 percent, and freelancers or remote workers, who are taxed at significantly lower effective rates of around 0.25–1 percent.

Proposals under review include either reducing taxes on employees working in export-oriented IT companies or increasing the tax burden on freelancers to create parity in the system. However, policymakers are also said to be reluctant to disrupt the rapidly growing freelance and IT export ecosystem.

According to Topline Securities, both proposals are expected to face resistance in next week’s budget announcement.