FBR imposes 25 per cent sales tax on imported CBU smartphones

ISLAMABAD: The Federal Board of Revenue (FBR) has announced a new tax imposition on imported mobile phones in Completely Built Up (CBU) condition, setting the threshold at $500 per set.

According to the updated Sales Tax Act, 1990 issued on Wednesday, a 25 per cent sales tax will now apply to such imports exceeding this value.

This move is expected to impact a significant number of flagship and mid-range smartphones, as many of them surpass the $500 mark. Consequently, prices of mobile devices, particularly premium models like the iPhone and Samsung Galaxy S series, are likely to rise, posing challenges for Pakistani consumers.

Prior to this amendment, devices such as the Samsung Galaxy S24 Ultra and iPhone 15 Pro Max were already priced above Rs450,000, reflecting the higher cost trend for both flagship and mid-range smartphones in Pakistan.

In addition to updating the Sales Tax Act, 1990 and the Federal Excise Act 2005 up to June 30, 2024, the FBR has introduced measures to combat tax fraud.

This includes establishing a Tax Fraud Investigation Wing within the Inland Revenue department, tasked with detecting and preventing tax evasion through enhanced investigative and analytical capabilities.

Under the revised legislation, the FBR may mandate electronic invoicing integration for certain entities, enhancing real-time reporting capabilities to streamline tax compliance. The Act also outlines stringent penalties for tax fraud, including fines and imprisonment terms based on the severity of evasion.

These amendments signify a proactive approach by the FBR to strengthen tax enforcement measures while addressing the fiscal challenges associated with imported mobile devices.

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