Overseas Pakistanis get tax concession on mobile phones

ISLAMABAD: The Federal Board of Revenue (FBR) has increased the depreciation allowance on the used/refurbished mobile phones brought into the country by overseas Pakistanis, implementing changes in its valuation ruling.

Under the Valuation Ruling Number 1834 of 2023 by the Directorate of Valuation Karachi, the depreciation rates for used/refurbished mobile phones has been increased from 30 percent to 60 percent for the assessment of duties and taxes.

The ruling means that international travelers, especially overseas Pakistanis, can import phones up to five years old at lower values, saving them money and reducing the burden of taxation.

However, the commercial importers will not get any relief from the ruling and would have to pay duties and taxes on comparatively higher customs values.

Under the new ruling, the used/refurbished mobile phones imported by bonafide passengers shall also be assessed on the customs values given as allowance for their depreciation is also incorporated in the said tabulated values.

The decision includes a comprehensive list of brands and models for assessing duties and taxes.

For models imported in commercial quantities but not covered in the ruling, the clearance collectorates are advised to assess them under Section 81 of the Customs Act, 1969.

Subsequently, a reference will be forwarded to the Directorate for the final determination of values.

The ruling also intends to curb the practice of under-invoicing, which involves declaring lower values for imported goods to evade taxes. It stated that the valuation methods should be consistent and uniform, and that the declared value should be accepted unless there is clear evidence of mis-declaration.

The Federal Tax Ombudsman (FTO) had directed the FBR that the appropriate depreciated value of used mobile phones based on physical condition and model should be applied in order to prevent unwarranted overcharging.

The FBR should also ensure to apply consistent and uniform valuation methods, giving due consideration to the declared value unless there is a clear evidence of mis-declaration, FTO order added.