A Senate committee has heard that one reason phone taxation is hard to administer is a data gap between two agencies. FBR sets taxes by a handset’s model and storage size, but the system run by PTA does not capture the model, IT and Telecom Minister Shaza Fatima Khawaja told the Senate Standing Committee on Cabinet Secretariat on 28 October.
The minister also pointed to who controls the rates: she said the power to change tax rates rests with the Tax Policy Office, not her ministry, and proposed calling its officials to brief the committee on how they set taxes and what that does to buyers.
The meeting appears on the Senate’s committee schedule for 28 October, in Committee Room 1 at Parliament House.
93% of phones in use are made locally
Khawaja put the locally made share of handsets in use at about 93%, which means most phones escape the taxes charged on imports. In her telling, phones brought in from abroad are not a large-scale business, and importing 5G-capable models is not the main obstacle to 5G.
She also said FBR taxes do not stand in the way of introducing 5G.
The gap matters because each agency answers for a different part of the process. As described at the meeting, PTA’s system, which registers phones for use on Pakistani networks, has no field for the handset model, while FBR needs the model and storage size to decide which tax applies. That makes it harder to match tax rates to the phones people actually carry, and it is the kind of detail that decides whether a tax cut reaches the buyers it is meant for.
Instalment plans for phones
On affordability, Khawaja said the prime minister has directed the government to draft a policy that would let people buy phones in easy instalments. No details of the scheme, such as who would finance it or when it would start, were given in reports of the meeting.
Senator Abdul Qadir also raised a proposal to make iPads and tablets tax-free, arguing that people use them for work and income, and asked for lower taxes on older phones. Nothing was decided at the meeting, and current duties and taxes remain in force. Phone tax rates fall under FBR rather than PTA, so any exemption for tablets or older handsets would need approval from the tax authorities, not just a recommendation from a Senate committee.
Next step: the Tax Policy Office
The next thing to look for is whether Tax Policy Office officials are called before the committee. Any change to phone taxes would have to come from them and FBR, so the committee’s recommendations carry weight only if the finance side acts on them.
