KARACHI: The Federal Revenue Board (FBR) has proposed to cut the regulatory tariff (RD) on the import of mobile phones by up to 50 percent in some cases, saying that the measure aims to "provide relief to the common man and support digitization efforts. "
The measure is expected to have no impact on the general collection of duties under this heading, as the FBR believes that it will lead to a greater volume of imports.
"This reduction in tariffs / taxes is expected to increase the volume of mobile imports in Pakistan," says the summary, which is signed by FBR President Shabbar Zaidi. This may ", to some extent, neutralize the negative impact of this measure."
Tariffs and taxes on mobile phones were reduced in the last budget announced in May.
Changes in tariffs on used clothing and polyester fiber were also proposed.
The biggest reduction in RD will be in mobile phones with a cost and freight value between $ 100 and $ 200, where the existing RD rate is Rs2,430 that the FBR proposes to reduce to Rs1,200 [see table for full detail].
The proposal will reduce the price of mobile phones in the market, but it could also discourage local assembly, say entrepreneurs who are in advanced stages of establishing local mobile phone assembly plants in the country. "This will effectively kill the viability of local smartphone assembly," one of those businessmen, who did not wish to be identified, told Dawn when he was contacted for comment.
Industry sources tell Dawn that PM in Trade adviser Razak Dawood is finalizing a mobile phone manufacturing policy in collaboration with the Engineering Development Board. Mobile phone assembly is one of the industries that is potentially moving from China, providing opportunities for other countries to attract investments in the sector.
In addition, the same summary also proposes to eliminate the RD tax on "worn clothes and other worn items", arguing that "these garments are worn by low-income people." At the moment, used clothing and items are subject to 10pc RD.
Polyester filament yarn (PFY), an important input in the country's textile industry, including exports, had seen its tariffs reduced from 5 percent to 2.5 percent in a supplementary budget last fiscal year.
In the last budget for fiscal year 2020, this was further reduced to zero. But now, the FBR has changed its mind, taking into account the interests of the local manufacturing sector of PFY.
"As the local PFY manufacturing industry is expanding its capacity, the Commerce Division has now recommended a 2.5pc RD levy" on the four tariff lines that are applicable to the import of PFY.
"Therefore, it is proposed that to support the national industry in the expansion of its capacity, the RD rate can be rationalized at 2.5pc in the importation of PFY, falling under five codes of the Pakistan Customs Tariff … evenly to avoid misstatements in the import stage, "says the summary.
The approval of financial advisor Hafeez Shaikh will be required for both proposals, after which the summary will be transferred to the cabinet.
Posted on Dawn, September 15, 2019
Source: https://www.dawn.com/news/1505299/fbr-moves-to-slash-duties-on-import-of-mobile-phones