The Federal Board of Revenue (FBR) has updated the Sales Tax Act, 1990, imposing a 25% sales tax on the import of mobile phones in Completely Built Up (CBU) conditions valued above $500 per set.
This update, issued on Wednesday, also includes amendments made through the Finance Act 2024. The revised Act stipulates that mobile phones and satellite phones exceeding $500 in import value will be subject to a 25% sales tax. This tax will apply at the time of import or registration (IMEI number by CMOs).
However, for imported CBU phones valued at $500 or less, an 18% sales tax will be levied.
Additionally, the supply of locally manufactured mobile phones in CBU condition will incur an 18% sales tax, regardless of whether the value exceeds $500. The same 18% tax rate will apply to imports in CKD/SKD condition and the supply of locally manufactured phones in CBU condition.
The updated Act also introduces a new definition of “tax fraud,” which encompasses actions such as understating tax liability, overstating tax credits or refunds, and submitting false returns or documents.
To address tax fraud, the FBR has established the Tax Fraud Investigation Wing-Inland Revenue, which will include units for fraud intelligence, investigation, legal matters, accounting, digital forensics, and crime scene analysis.
The FBR’s notification requires certain businesses to integrate their electronic invoicing systems with the Board’s computerised system for real-time sales reporting. Penalties for tax fraud include a fine of Rs25,000 or 100% of the evaded tax amount, whichever is higher. Offenders may also face imprisonment for up to five years if the evaded tax is less than one billion rupees, and up to ten years if it exceeds one billion rupees.
