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Cellular cos seek industrial status, withdrawal of duty

Cellular cos seek industrial status, withdrawal of duty

ISLAMABAD: The cellular services operators have asked the government to withdraw hike in Customs duty on imported machinery and abolish collection of registration fee on activation of phone sets introduced in the Finance Bill 2014-15.

According to the representatives of the cellular companies who also held a meeting with the Federal Board of Revenue, they reserve the rights to approach all appropriate forms including the apex court if the government fails to address their grievances.

The cellular operators are of the view that the government instead of complete withdrawal, has only withdrawn certain sections of SRO 575, but on the other hand has levied enhanced duty on imported telecom machinery in the Federal Budget 2014-15.

They regretted that at a time when the cellular companies are set to import $2 billion to $3 billion machinery in the aftermath of 3G and 4G in Pakistan, the rate of Customs duty has almost doubled which they say would create multifarious problems for the sector.

They express the fear that their business plan for rolling out 3G and 4G would be in jeopardy if the government does not withdraw the duty.

According to the law, the cellular companies could not be given the status of industry as they are not involved in manufacturing.

The law explains that the cellular companies are service providers so they cannot be treated as an industry until and unless they start manufacturing in the country.

Meanwhile, reports say that the FBR proposed cutting down two tax rates in the Finance Bill 2014-15 on the recommendation of the Ministry of Information Technology, as the rate of advance tax on mobile phone bills has been reduced from 15 percent to 14 percent and the sales tax from 19 percent to 18 percent.

According to the Finance Bill 2014-15, the liability to pay sales tax at the time of import of cellular mobile phones or satellite phones will be on the importer and the liability to pay the sales tax at the time of registration of a new International Mobile Equipment Identity (IMEI) number for the first time will be on the cellular mobile operator who registers the IMEI number in his system.

The cellular mobile operators will, if not already registered, obtain registration under the Sales Tax Act, 1990. No IMEI number will be registered by a cellular mobile operator without charging and collecting the sales tax. The cellular mobile operator will deposit the sales tax collected through his monthly tax return in the manner prescribed in Section 26 of the Sales Tax Act, 1990, and the rules made there under.