Despite uproar from overseas Pakistanis, not a single tax-free phone to be allowed into country

FILE PHOTO: A customer holds the new iPhone XS and iPhone XS Max at the Apple Store. REUTERS/Edgar Su/File Photo

• Duty on mobile phones imported before July 2019 and not declared must be paid
• Overseas Pakistanis say they are being forced to pay tax in two countries for the same phone

KARACHI: Overseas Pakistanis have criticized a move by the country’s tax-collecting agency, the Federal Board of Revenue (FBR), that last month enforced a mandatory tax on every mobile phone set brought into Pakistan- even those for personal use.
The new rule which overturned a previous policy came into effect on July 1st. The FBR changed its personal baggage rules which used to permit one phone to go tax-free out of the five allowed to overseas Pakistanis every year. But as of last month, the tax now applies to all phones brought into the country that use a local SIM card. 
“We go back to home country after year or two and mobile phones are most sought after gifts by our families,” Muhammad Munir Chaudhry, a Pakistani expat from Sharjah told Arab News.
“We pay taxes here (in Sharjah) and if we also pay tax in the home country it becomes more expensive for us. At least two mobile phones should be allowed duty-free,” he said.
But officials say no such policy-turn is in sight and the rule is here to stay.
“There is no policy on the cards for now. If the matter is raised at any forum and that leads to any policy change that is something else,” Muhammad Ali, senior Pakistan customs official, told Arab News.
FBR officials say the allowance for one duty-free phone was largely misused as phone owners looking to avoid paying taxes and getting their phones blocked by the government registered their phones in the black market instead, against the passport information of overseas travelers whose personal data was leaked. 
“One mobile phone handset was allowed and people were using (random) passport numbers to get it registered. There were complaints that people were misusing this facility,” Ali said and added, “In the past, we have detected many cases where people were involved in imports of mobile phones without declaring them.”
The official also said phone sets brought into the country and left unregistered before the renewed deadline of July 1, 2019 could not be registered now, because there was no way of knowing when they arrived in Pakistan.
“When they had arrived in Pakistan at that time they should have declared the mobile sets and put on record. Now it is not possible to establish if the mobile set was brought before July or is imported now,” Ali said.
“I brought a Nokia 6 for my younger brother last week,” Mehmood Chaudhry, a laborer from Dubai told Arab News. “At the airport, I had to show my phone and was told that I had to pay an extra Rs. 6,100 ($38)” he said and added that it was a huge financial burden for expats returning home who saved for months to buy phones for their families in Pakistan.
The tax applied is collected by Pakistan’s telecom regulator, Pakistan Telecommunication Authority (PTA), after the price valuation of phone sets. 
With over 76% percent telephone density, Pakistan has 161 million cellular subscribers, and selling mobile phones has been a booming business for years.
For phones brought through official channels, the imports of phone sets during outgoing fiscal year FY19 declined by 11 percent to $755 million as compared to $847 million in the previous year, Federal Bureau of Statistics data shows.
Following increasing incidents of mobile theft and resale, and the misuse of phones and local sims in militant activities, in 2015, PTA began a campaign to register all SIM based devices, including mobile phones, tablets and other devices through a Device Identification, Registration and Blocking System (DIRBS).
According to officials, the strict registration of mobile devices has never had much to do with revenue generation for the government. 
“We never relied on mobile phones as big revenue boost,” Ali said. “Earlier, Rs. 250 ($1.56) was fixed tax rate but it did not result in a revenue boost. It is no big revenue impact (even now) but it will serve the purpose of minimizing imports”.