Pakistan’s imports of handsets and network equipment dropped sharply in August after the government raised taxes by up to 100 per cent.
Handset imports fell 10 per cent to PKR6.1 billion ($60 million), while network gear imports declined 36 per cent to PKR5.6 billion from a year ago, ProPakistani reported.
The government introduced a series of taxes on the telecoms sector for fiscal 2015-16, including a GST on handsets that doubled the rate to PKR300-1,000 per unit ($2.85-$9.50).
Importers didn’t have the option of not passing on the higher tax to consumers because the taxes are collected at entry point and have slowed imports just as more foreign brands are targeting Pakistan, the newspaper said. Provincial governments also levy a 19.5 per cent tax on 3G/4G services. They have said they would drop the tax but have not followed up on that promise.
In fiscal 2014-15 the government raised the custom duty on telecoms equipment to 10 per cent from 5 per cent, which soured the investment climate for the country’s mobile operators as they prepared plans to upgrade their networks to 3G and 4G.
Imports of telecoms gear dropped 46 per cent to PKR8.9 billion in July-August from the same period a year ago, according to the Pakistan Bureau of Statistics.
The depreciation of the rupee against the dollar has also raised the cost of importing mobile phones and infrastructure gear.
Pakistan has nine mobile players and 138 million connections.