Pakistan’s mobile tax situation has a major problem, but it can easily be fixed.

The recent exchange inside the Finance Committee discussing high taxes on iPhones and other high-end models did not reveal a new problem; it simply brought long-standing faults within the mobile tax framework into clear view.

The Problems

Pakistan has built a taxation model around imported high-end phones that is rigid, unforgiving, and unaligned with real-world usage. The Pakistan Telecommunication Authority (PTA) itself admits that 94% of all phones in Pakistan are now assembled locally, and only 6% fall under high-end imports. Yet this small segment is taxed the most aggressively, often facing duties that reach 50–55% of the device’s value.

The system offers no flexibility, no consumer safety net, and no logical mechanism to protect users from basic risks like theft, hardware failure, or depreciation. This is not how modern tax systems operate, and Pakistan can no longer pretend it makes sense.

Lost Taxes From Stolen Phones

If someone pays around Rs. 200,000 in PTA taxes for an iPhone 17 today and it gets stolen tomorrow, which is likely considering law and order conditions, every rupee of that tax is lost. There is no transferability of the tax, no ability to reassign the paid duties to a replacement device, and no contingency for the common urban threat of phone snatching.

In a country where device theft is routine, treating a massive tax payment as permanently tied to one IMEI is unreasonable. Experts suggest that the state should allow consumers to:

• Deregister a stolen device
• Transfer already-paid tax to a new IMEI
• Receive a tax credit token for a future device

Currently, the tax becomes a sunk cost, forcing users to pay again. Any transferability or tax credit could be time-bound, for example, valid for two years from the date of commencement, to avoid lifetime exemptions.

Broken/Bricked Phones Lose Paid Taxes

Phones naturally encounter hardware failures, crashes, liquid damage, or screens beyond repair. Worldwide, replacement mechanisms exist to address such issues. Under the PTA model, however, if a device becomes unusable, the tax paid on it becomes unusable as well. There is no transfer, no credit, and no recognition that electronic failures are normal.

The system treats the tax like a penalty fine instead of a license tied to the user, reflecting an outdated approach that ignores basic consumer rights.

Tax Remains Fixed Despite Price Drops

Flagship devices inevitably depreciate. An iPhone launched at Rs. 400,000 may drop to Rs. 300,000 within six months. While global and local markets adjust, PTA taxes remain locked to the original, inflated value.

This causes distortions:

• Older models remain artificially expensive
• Users waiting for price drops are punished
• The tax-to-value ratio becomes irrational
• Mid-cycle buyers face unfair barriers, slowing the local market

A dynamic market demands dynamic taxation. The current PTA structure assumes phone prices never move, which is unfair to consumers.

Used Phones Taxed Like New Devices

Used and new phones are treated identically for tax purposes, with no differentiation in rate or valuation, even if a device is two or three years old. PTA fears abuse, but the fundamental flaw remains:

• Second-hand devices become unnecessarily expensive
• Older models lose affordability
• The used-phone ecosystem shrinks, affecting lower-income consumers
• Market behaviour is distorted as people avoid older models

In Pakistan, second-hand devices are essential, not a luxury. A one-size-fits-all tax model ignores this reality.

How to Fix The Issues

While the intent behind limiting imports and supporting local assembly is understandable, a tax system must be fair, flexible, and modern. The current model fails on all three counts.

• Experts suggest basic structural improvements:
• IMEI-to-IMEI tax transfer for stolen or bricked phones (time-limited)
• Tax credit tokens are valid for replacement devices
• Dynamic valuation tied to updated market prices
• Separate tax tiers for certified used devices
• A loss-proof registry for theft or irreparable damage

These reforms would not weaken revenue but would align taxation with real-world behaviour and consumer protection. They would also rebuild trust, which has eroded as compliant buyers discover that paying full tax gives no return, flexibility, or protection.

Pakistan cannot advance its digital ecosystem if its taxation model belongs to another era. High-end phone buyers may form a small segment, but they consistently pay full price. Treating their payments as disposable, without recourse for loss, damage, or depreciation, is not policy; it is negligence disguised as taxation.