The Federal Board of Revenue (FBR) has updated the Sales Tax Act, 1990, instituting a 25% sales tax on the import of Completely Built Up (CBU) mobile phones valued over $500 per unit. This change, effective from Wednesday and incorporating amendments from the Finance Act 2024, specifies that both mobile and satellite phones exceeding this value will be taxed at 25% upon import or registration (IMEI number by CMOs).
For imported CBU phones valued at $500 or less, an 18% sales tax will apply. Similarly, locally manufactured CBU phones will also face an 18% sales tax, regardless of their value. The same 18% tax rate will be applied to imports in CKD/SKD condition and to the supply of locally made phones in CBU condition.
The updated Act introduces a new definition of “tax fraud,” covering actions such as underreporting tax liabilities, overstating tax credits or refunds, and submitting false returns or documents. To combat tax fraud, the FBR has established the Tax Fraud Investigation Wing-Inland Revenue, which will consist of units specializing in fraud intelligence, investigation, legal issues, accounting, digital forensics, and crime scene analysis.
Additionally, the FBR’s notification mandates certain businesses to connect their electronic invoicing systems to the Board’s computerized 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, with potential imprisonment of up to five years for evaded tax below one billion rupees, and up to ten years for amounts exceeding one billion rupees.
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