Prime Minister Imran Khan has launched a ‘Digital Pakistan’ vision aiming to bridge the digital divide by improving on digital infrastructure, investment in digital skills and literacy. The idea is to ensure Pakistan is soon at par with global players in the field of technology and innovation.
But prior to this announcement, a major hurdle towards internet penetration was the introduction of a compulsory tax on all phones, which changed things for the worse for the digital ecosystem in the country. As per some calculations, these exorbitant taxes led to a significant decrease in imports of smartphones – the tool necessary to improve on our dismal internet penetration numbers.
It was a welcome decision when the Government of Pakistan ushered in the new year with a presidential ordinance on reducing the rate of withholding income tax and the sales tax on the import of mobile phones.
The Federal Board of Revenue (FBR) issued a list of salient features to explain the amendments to Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2001. The amendments will apply to income tax, sales tax, and customs duty.
As per this order, withholding taxes have been reduced for mobile phones having a value of USD 30 to USD 100, from PKR 730 to PKR 100 per mobile phone. While sales tax on mobile phones that cost up to USD 30 has been reduced to PKR 100 and on phones that cost up to USD 100, the sales tax has significantly been reduced to PKR 200.
Speaking about this development, Jazz Chief Corporate & Regulatory Affairs Officer Syed Fakhar Ahmed said, “The government’s move to reduce the duty on basic smartphones is a welcome decision. For a truly #DigitalPakistan, affordable and quick access to the Internet is critical. With this pro-technology move, we also predict improved social impact in healthcare, education and digital financial services, especially in underserved areas of Pakistan. We look forward to more substantive policies that make Pakistan digital in the long term.”