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FBR likely to slash duties on mobile phones’ import

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KARACHI: The Federal Board of Revenue (FBR) has proposed to slash regulatory duty (RD) on import of mobile phones by up to 50 per cent in some cases, saying the move is aimed to “provide relief to the common man and to support digitisation endeavours.”
The move is expected to have no impact in overall collection of duties under this head, since the FBR believes it will lead to higher volume of imports.
“This reduction in duty/tax is expected to increase import volume of mobiles in Pakistan,” the summary, which carries the signature of FBR Chairman Shabbar Zaidi, says. This may “to some extent, neutralise the otherwise negative impact of this measure.”
Duties and taxes on mobile phones were reduced in the last budget announced in May.
The sharpest reduction in RD will be on mobile handsets with a cost and freight value between $100 and $200, where the existing RD rate is Rs2,430 that the FBR is proposing to bring down to Rs1,200 [see table for full detail].
The proposal will reduce the price of mobile handsets in the market, but could also provide a disincentive for local assembly, say businesspersons who are in advanced stages of setting up local mobile phone assembly plants in the country. “This will effectively kill smartphone local assembling feasibility,” one such businessperson, who did not wish to be named, told Dawn when reached for comment.
Industry sources tell Dawn that a mobile phone manufacturing policy is being finalised by the Adviser to PM on Commerce Razak Dawood in collaboration with the Engineering Development Board. Assembly of mobile phones is one of the industries that is potentially being moved out of China, providing opportunities for other countries to attract investment in the sector.
In addition, the same summary also proposes to eliminate the RD imposed on “worn clothing and other worn articles”, arguing that “these clothing articles are used by low income people”. At the moment, worn clothing and articles are subject to 10pc RD.