Late last year, the Pakistani government changed personal baggage rules to allow international travelers to bring only one mobile phone into the country per year without paying any customs duty. However, it seems authorities are changing this baggage rule exemption, making the rules about mobile tax in Pakistan even worse for citizens and even some non-citizen travelers.
Citing local media reports, Techjuice reports that the government is now looking to tax international travelers even if they bring one smartphone to Pakistan. According to local media reports, the government will soon issue a notification for international travelers visiting Pakistan to pay tax even for their first mobile registration.
In other words, no duty-free phones will be allowed. This news about the mobile tax in Pakistan comes amid reports that miscreants are stealing passenger data, such as their passport details to escape the heavy taxes imposed on bringing more than one mobile phone into the country.
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Authorities say the public is misusing the baggage rule exemption. Smuggled and blocked phones are being registered in the names of passengers whose data has been stolen from government records. Due to this, the government believes abolishing the baggage rule exemption will prove effective in curbing the black market for mobile devices. A senior Federal Board of Revenue (FBR) official hinted the same during the agency’s press conference on the 2019-20 budget, local reports say.
How the baggage rule exemption is being exploited
Pakistan amended approval standards for mobile phone types last year. According to the amended standards, a person can import only five phones in a year for personal use, and of those, only one will be registered with the Pakistan Telecommunication Authority (PTA)’s Device Identification Registration and Blocking System (DIRBS) as duty-free. No registration is needed if the phone will be used in Pakistan for less than 30 days.
“For people bringing in phones from abroad, as per personal baggage rules. One phone per annum is allowed duty free and up to a maximum of 5 phones in a year can be brought in,” Pakistan’s Minister of State for Revenue, Hammad Azhar, tweeted in November.
The DIRBS was introduced to end the smuggling of illegal mobile phones into Pakistan. However, the system has so far proved to be ineffective due to loopholes at airports. One such loophole is the misuse of passenger data to illegally register phones under the baggage rule exemption. Even the PTA has acknowledged that passenger data was hacked and then used to smuggle phones into the country.
Techjuice reported separately that the PTA has directed about 760 cases of data theft to the Federal Investigation Agency (FIA). Several arrests have also been made. Most of the smuggled mobile phones are being registered in the names of children.
Trouble for citizens
According to numbers from the PTA, over 663,622 people have registered their devices with the DIRBS since February. Of the total, 440,821 are registered as duty-free, while over 12,000 are registered under the duty-paid category.
Due to these illegal registrations, thousands of passengers and international travelers have been unable to register their mobile phones under the baggage rule exemption. In addition to denying citizens their right to a duty-free phone, the mobile tax in Pakistan is also causing issues at airports.
Neither airport authorities nor customs officials have separate resources to manage registrations of mobile devices. It is being reported that the government haphazardly imposed a mobile tax in Pakistan to boost its revenue and that telecom regulators and other government agencies are not fully prepared to handle it. Moreover, the handsets the PTA blocks via the DIRBS are easily unblocked on the black market for anywhere between Rs2,000 (approx. $13) and Rs3,000 (approx $19), depending on the type of phone.
The government proposed abolishing the 3% tax on commercial imports of mobile phones in the 2019-20 federal budget.
“This measure would also ensure rationalization of tax on import of mobiles,” Azhar said.
The government may also withdraw the exemption for the federal excise duty (FED) on foreign satellite bandwidth services and internet services.