The Federal Board of Revenue (FBR) has announced new tax regulations concerning the import of mobile phones in Completely Built Up (CBU) condition. These regulations, outlined in the updated Sales Tax Act, 1990 released on Wednesday, stipulate that a 25 per cent sales tax will be imposed on mobile phones imported in CBU condition with a value exceeding USD 500 per set.
The updated Sales Tax Act incorporates amendments introduced in the sales tax and federal excise laws through the Finance Act 2024. This move signals a significant shift in the taxation framework governing the import of mobile phones and aims to bring about greater fiscal accountability within the industry.
According to the updated regulations, the 25 per cent sales tax will be applicable on mobile phones in CBU condition at the time of import or registration (IMEI number by CMOs). Meanwhile, a reduced 18 per cent sales tax will be charged on imported CBU phones with a value not exceeding USD 500. Additionally, an 18 per cent sales tax will be levied on the supply of locally manufactured mobile phones in CBU condition, augmenting the overall tax implications within the mobile phone market.
Furthermore, the revised Sales Tax Act introduces a new definition of “tax fraud” pertaining to intentionally understating or underpaying tax liabilities, submitting false returns or statements, and withholding accurate information. The FBR has also established the Tax Fraud Investigation Wing-Inland Revenue to detect, analyze, investigate, combat, and prevent tax fraud. This demonstrates the authorities’ unwavering commitment to enforcing compliance and accountability, ensuring a fair playing field for all stakeholders.
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Under the new regulatory framework, the FBR may require individuals or groups to integrate their electronic invoicing systems with the board’s computerized system for real-time reporting of sales. The regulations also stipulate severe penalties for individuals found guilty of tax evasion or fraudulent activities. This underscores the FBR’s strong stance against non-compliance and illicit practices in tax matters, making it clear that the consequences of such actions are severe.
In light of these new regulations, it is evident that the FBR is taking proactive measures to enhance transparency and curb tax fraud in the import and supply of mobile phones. These developments mark a significant shift in the taxation landscape, signalling a more rigorous approach to ensuring fiscal integrity and compliance within the mobile phone industry. This proactive stance of the FBR is set to bring about positive changes in the industry, fostering a more transparent and accountable business environment.
