Senate committee calls for lower taxes on digital devices

Islamabad: The Senate Standing Committee on Cabinet Secretariat called for a review of taxes on mobile phones, tablets and iPads, while seeking stronger measures to promote digital access and to protect local industry.

 The committee meeting chaired by Senator Rana Mahmood-ul-Hassan, considered a wide range of issues, including taxation on digital devices, preparations for 5G services, regulation of virtual assets and cryptocurrency-related activity, illegal migration, Islamabad Club membership, declaration of foreign citizenship by civil servants, and proposed rules governing the use of social media and media platforms by government employees.

The committee emphasised the need for a reduction in taxes on digital devices. The chairman committee questioned the government’s approach of promoting free laptops and mobile phones on the one hand while imposing taxes that, in his view, undermine the benefits of such initiatives on the other. He called for tablets to be kept outside the tax net.

Senator Saadia Abbasi said taxation was affecting businesses and reducing productive capacity. She opposed a policy of continuously increasing the financial burden on citizens and said taxation should not be used simply to extract the maximum possible revenue from the public.

Rana Mahmood-ul-Hassan called for the complete removal of tax on tablets and urged the government to reduce taxes on all mobile phones. Referring to a report by the GSM Association (GSMA), he cautioned that high taxation could impede the rollout and success of 5G in Pakistan.

The Chairman of the Pakistan Telecommunication Authority (PTA) informed the committee that 37 companies were currently assembling mobile phones in Pakistan and that local manufacturers were not subject to the same tax treatment as imported devices. He said 92 per cent of mobile phones in the market did not carry the tax in question, while only 8 per cent — those imported from abroad — were subject to it. According to the PTA Chairman, 31 million mobile phones had been manufactured in Pakistan.

Responding to concerns about the impact of taxation on 5G, the PTA Chairman said locally manufactured devices currently did not generally support 5G. Local manufacturers were therefore being encouraged to assemble 5G-enabled phones in Pakistan. The PTA Member (Policy) separately informed the committee that 35 companies were manufacturing mobile phones in Pakistan and that 95 per cent of the population was using locally manufactured phones.

An official of the Federal Board of Revenue clarified that the FBR does not itself impose taxes. The National Tariff Board sends tax recommendations, the FBR is represented on the Board as one of its members, and taxation is ultimately imposed by Parliament.

The Establishment Secretary said the Government also had to protect local industry and stressed that the tax burden should fall on those with the capacity to bear it.