Telecom industry, overseas Pakistanis concerned over mobile tax policy

ISLAMABAD: The overseas Pakistanis, telecommunication operators and industry experts have expressed concern over the government’s new policy to allow only one duty free mobile phone for the overseas travellers and register even one phone at airports and Custom houses.

According to sources, even Pakistan Telecommunication Authority (PTA) has taken up the issue of imposing exorbitant duties on the imported mobile phones with the government but remain unsuccessful in convincing the government. The overseas Pakistanis not only have to stand in one extra-queue for the registration of their own phones but also have to pay heavy duty on any gift phone they might have brought for their family or friends. Under the new policy aimed at curbing phone smuggling and use of unregistered phones, the PTA has introduced Device Identification Registration and Blocking System (DIRBS).

The FBR’s Customs authorities are registering mobile phones under the newly placed system at all the international airports. Each passenger is allowed to bring only one duty free phone from abroad while he/she will have to pay duty/taxes on any additional phone bought from abroad.

According to Noman Jamshaid he had to pay tax and duties worth Rs10,970 on Customs counter at the Allama Iqbal International Airport on a single phone (Samsung J6 Plus) which his sister-in-law bought from China for Rs24,400. “This is way too much tax on a single phone. The government should have let overseas Pakistani bring at least two phones without duty,” Noman said adding that overseas Pakistanis always play vital role in country’s development and they deserve such concessions from the PTI government which has huge following among Pakistanis living or working abroad. He added that these overseas Pakistanis have to stand in another long queue at the airport to register their own phones as they would not work without registration of their International Mobile Equipment Identity (IMEI) with the PTA. “Travellers are already tired when they land at airport after long flights and after standing in queues for immigration and luggage they have to again queue up for mobile registration. This is something which I have not seen anywhere in the world,” says Noman, a resident of Rawalpindi, who travels frequently for his business.

The Telecommunication Industry is also concerned about the move. “We support the intent behind the initiative. However, we are concerned that the complexity of implementing it will inconvenience the customer,” Aisha Sarwari, Head of Communications and Sustainability Jazz, told The News. “We hope that in addition to the change of policy, for which we are supportive, the regulators also pay attention to customer’s experience,” Aisha added. She said her company wants Pakistan to expand digitally and be more digitally literate because “we feel this is an important step towards economic transformation.”

Experts have called the registration of IMEIs a good move for security but strongly criticised the imposition of heavy duties on extra mobile phones brought by the overseas Pakistanis. “There are more than 300 million mobile phones operational in Pakistan according to some estimates. What difference will 0.1 million additional phone brought by overseas Pakistanis will make in terms of revenue collection if we compare it to the whole market?” asks, Salman Ansari a former Adviser to the government on IT and Telecommunication.

Salman, who has been working as IT and Telecom Consultant for last many decades, lamented the government apathy towards overseas Pakistanis. “I don’t know who advises the government to introduce such foolish things. The overseas Pakistanis always donate generously for good causes. They send valuable remittances yet they are being punished with such steps,” he said adding the misuse of mobile Sims and IMEI must be curbed but no inconvenience should be caused to the overseas Pakistan in the form of mandatory registration or imposition of heavy taxes. He also asked the government to restore licences of mobile companies which are expiring next year on payment of reasonable charges as per the initial agreement. Otherwise, he warned that at least one company has threatened to pull out all its investment and leave the country which will be disastrous for country’s economy, he said. Salman also advised the government to encourage local manufacturing of mobile phone through tax concessions.

Despite repeated contacts, Minister of State for Revenues, Hammad Azhar, did not respond to The News on queries related to imposition of taxes on phone. He, however, has already tweeted the government policy on allowing only one duty free mobile phone set for people travelling from abroad into Pakistan. In his tweet, Hammad writes there was no Registration/Duty needed on any phone(s) using roaming. “Thirdly, no Reg/Duty needed if phone(s) to be used in Pak for less than 30 days.” Moreover he added no registration/duty required on any phone that was activated or ever used in Pakistan before the 1st of December 2018.

While contacted, the PTA Director General Services, Talib Dogar, who drafted DIRBS, said the system is unique and flawless. “We might get some international award for this unique system,” he claimed. When asked why no developed country or even countries like Saudi Arabia and UAE have introduced such strict registration system at their airports, he said the DIRBS was devised as per policy directive by the government issued in 2015. The aim of the system was to ensure that each IMEI is recognised so the security agencies could identify criminals and terrorists if they use mobile phones. It was also aimed at curbing smuggling of phones into Pakistan and use of phone with duplicate and cloned IMEIs.

Dogar said similar system is working in Brazil, Turkey and Columbia. When asked about inconvenience caused to travellers at the airport for registration of phones, he said: “It takes only one minute to register an IMEI. Our system responds really quickly.” Asked why travellers are not allowed to register their IMEIs online? he said the online registration system was tested but failed to deliver fool-proof results as people can register one phone online and still register another on airport. The PTA official said each member of the travelling family can bring one mobile phone without paying duty or taxes.

On the issue of PTA trying to convince the government not to impose heavy taxes on the imported phones, he refused to comment saying the matter does not come under the PTA domain. He said users of illegally imported mobile devices have until December 31 to get their phones regularised with the PTA, without having to pay penalty charges. When contacted a spokesman of Pakistan Cutoms, Qamar Thalho told The News that only three phones were regularised at Karachi airport on Thursday.

Explaining the amount of duty charged on each phone, he said the FBR has given a list of phones with their assessed value to Custom counters at the airport to calculate duty on each phone. As per FBR website, the duty and tax structure on imports of mobile handset will be as follows. A Custom duty of Rs250 will be charged on low priced phone (worth $60 or less) while 10% regulatory duty will be charged on medium priced phone (Worth $60 up to $130) and 20% duty will be charged on high priced smartphones (worth above $130 ).

In addition to these charges 3% advance sales tax will also be charged while an additional sales tax of Rs650 will be charged on low and medium priced phone and Rs500 sale tax will be charged on high priced smartphones. There would be 6% advance income tax on all smartphones for tax return filers and 9% for non-filers. In addition to above charges there will be Mobile Handset Levy of Rs1,000 to Rs5,000 depending on the value of the phone sets.