The federal government has unveiled changes to the tax structure for mobile phones in the 2026-27 budget, balancing duty reductions with a focus on revenue generation from premium devices. While a 20% reduction in regulatory duty on high-end imported phones will take effect on July 1, 2026, leading to a price drop of Rs. 14,000 per unit, the Federal Board of Revenue (FBR) is emphasizing a shift toward supporting affordable, locally assembled devices.
Strategic Tax Policy for 2026-27
FBR Chairman Rashid Mahmood Langrial briefed the National Assembly Standing Committee on Finance, highlighting the following policy directions:
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Targeted Relief: The FBR recommends that future tax concessions should be strictly limited to entry-level phones priced between $31 and $200 to benefit price-sensitive, first-time buyers.
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Maintaining Structure: The FBR advised against broad restructuring, arguing that the current progressive tax system is effective at generating revenue and is equitable.
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Focus on Local Assembly: With 95% of mobile phones in Pakistan now locally assembled, the government intends to preserve concessions under the CKD/SKD (Completely/Semi-Knocked Down) regime to keep prices low for the mass market.
Market Performance and Revenue
Latest data indicates a robust growth in the mobile sector despite tax burdens:
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Import Growth: The number of imported mobile units surged by 61%, rising to 1.04 million units.
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Revenue Surge: Tax collection from imported phones grew by 136%, totaling Rs. 36.9 billion.
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Premium Device Contribution: Flagship smartphones (priced above $500) make up 16% of imports but contribute 58% of total import tax revenue (Rs. 21.6 billion).
The FBR maintains that broad cuts on premium imported phones would be regressive, effectively providing a costly tax transfer to the most affluent consumers while resulting in a significant loss of government revenue.
