This new tax policy was outlined in the updated Sales Tax Act, 1990 issued on July 25, 2024.

The updated Act reveals that an 18% sales tax will be charged on imported CBU phones valued at $500 or less. Similarly, locally manufactured mobile phones in CBU condition will also attract an 18% sales tax, in addition to the 18% tax applicable on imports in CKD/SKD condition.

The new tax regime aims to generate additional revenue for the government, particularly targeting high-end smartphone imports.

Industry analysts expect this move to drive up the prices of premium mobile devices in the Pakistani market.

The FBR has also introduced a revised definition of “tax fraud” in the updated Sales Tax Act.

This broader definition encompasses intentional understatement or underpayment of tax liability, as well as overstating entitlement to tax credits or refunds, in contravention of the Act’s duties and obligations.

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This latest development is part of the government’s ongoing efforts to restructure the country’s tax system and bolster its fiscal position amid economic challenges.

The impact of the new mobile phone tax on consumer demand and the broader technology sector remains to be seen in the coming months.