Senate panel seeks immediate cut in taxes on imported mobile phones

ISLAMABAD: The Senate Standing Committee on Cabinet Secretariat on Monday recommended an immediate reduction in taxes on imported mobile phones, questioning the existing mechanism for determining their prices and the burden of taxes on consumers.

The committee, chaired by Senator Rana Mahmood-ul-Hassan, directed Customs authorities to devise a mechanism for determining the valuation of imported mobile phones and sought reports from the Federal Board of Revenue (FBR) and the National Tariff Commission on the taxes imposed on mobile devices.

During the meeting, Pakistan Telecommunication Authority (PTA) officials told the committee that Customs would have to establish a mechanism for determining the prices of imported mobile phones.

The committee subsequently directed Customs to formulate a mechanism for taxation and valuation of imported mobile phones.

Senator Abdul Qadir questioned whether mobile phones should be taxed at all, saying policymakers needed to consider whether such taxation was necessary.

FBR officials told the committee that the authority to impose, reduce or abolish taxes rested with Parliament.

Senator Dalwar Khan criticised what he described as the absence of long-term government policies, while Senator Sadia Abbasi said that the government should facilitate businesses instead of exploiting them through excessive taxation.

“Instead of exploitation, businesses should be facilitated,” she said, adding that the government was creating difficulties for people by imposing taxes.

PTA officials informed the committee that 35 companies are currently manufacturing smartphones in Pakistan, highlighting the growth of local mobile phone production.

Cabinet Secretary Kamran Ali Afzal also opposed the imposition of sales tax on mobile phones, while stressing the growing importance of digital payments.

He said digital payments were bringing a transformation to the country’s payment system.

Virtual assets, cryptocurrency market

The committee also received a detailed briefing from Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib, on the country’s rapidly expanding digital assets and cryptocurrency sector.

Saqib said that the concept of money was changing globally, with countries increasingly exploring alternative forms of currency and digital assets.

He cited Dubai, Thailand and Singapore are moving towards alternative currency systems, while noting that Hong Kong had issued bonds using blockchain technology.

He said that Pakistan’s young population was increasingly seeking economic independence through digital technologies and claimed that the country had become the world’s third-largest crypto market.

According to Saqib, around 40 million Pakistanis hold cryptocurrency accounts, compared with about six million active taxpayers in the country.

He said that PVARA had been established, among other objectives, to bring cryptocurrency users into the formal tax net.

Saqib said that Pakistan had now established a regulatory regime for virtual assets and warned that restricting technology amounted to restricting the country itself.

He said international digital currency companies had applied for no-objection certificates (NOCs) to operate in Pakistan.

He added that Binance and HTS had also applied to PVARA for NOCs.

According to Saqib, the authority would take strict action against illegal digital asset companies after September 5.

He said permanent recruitment was also under way at PVARA and that the authority had so far spent only around 8 per cent of the budget allocated by the government.

Pakistan eyes digital remittances, Islamic finance

Saqib said that Pakistan wanted to become a global leader in Islamic finance through digital assets and planned to bring remittances from abroad onto digital platforms.

He maintained that Pakistani youth had already developed a strong understanding of digital currencies and were increasingly participating in the sector.

The Senate committee decided to seek another briefing from PVARA on digital assets and cryptocurrency regulation at a future meeting.

The meeting thus covered two major aspects of Pakistan’s evolving digital economy — the high cost and taxation of mobile connectivity and the growing demand for regulation of digital assets and cryptocurrencies.