ST should be collected at import stage: PTA

SOHAIL SARFRAZ

ISLAMABAD: Pakistan Telecommunication Authority (PTA) has recommended Federal Board of Revenue (FBR) that sales tax being charged at the time of registration of IMEI numbers by cellular mobile operators (CMOs) may result in multiple taxation on same mobile phone sets.

It is learnt that the PTA further recommended that the sales tax should be collected at import stage on verification issued by the PTA. According to the decisions of the PTA’s joint committee meeting with the FBR, PTA convened a meeting with the FBR team at FBR House and later with the representatives of the CMOs on the issue of sales tax on mobile phone sets.

PTA is of the view that the matter is more technical and legal than only limited to charge of sales tax at one incidence or other. The following brief points need to be understood before moving in this respect:

Upon the direction of Supreme Court of Pakistan, PTA had started issuance of Type Approval (TA) for mobile hand sets used/to be used and sold and marketed within Pakistan. All mobile TA holders need to get NOC for each shipment from PTA by providing the IMEI numbers along with commercial invoice and Air Way Bill (AWE) Number to PTA. PTA issues NOC for clearance of mobile handsets from Custom authorities. This procedure needs to be strictly implemented by Custom Collectorate.

Regarding categories of handsets technically it is not possible to identify the hand set and group it according to the 9th Schedule provided for levy of taxes accordingly due to the fact that the network can not identify the category of the hand set according to its camera features and screen size. Furthermore, it will also create hurdles for international roamers regarding levy of taxes on them. Even though if such a system of Equipment Identity Register (EIR) is implemented for IMEI Numbers, it would be very difficult to differentiate among the previously imported legal sets and newly activated IMEI numbers in the system. Needless to mention that the subscribers also change the service provider. Hence, it would be very difficult for the CMOs to levy charge on them. PTA does not have sufficient resources to identify and take into account the existing IMEIs available in Pakistan. Currently the mobile phones in Pakistan are estimated to be approx. 200 million, and PTA has only recently started issuance of TA Certificate/NOC for the purpose of import of mobile phone where the particular IMEI or a series of IMEI is allowed for the import. PTA is not in a position to control and monitor movement of IMEI from operator to operator, PTA maintained. Under PTA Type Approval (TA) Regulations and Pakistan Telecommunication (Reorganization) Act, 1996 (the Act), the operators are not required to provide the detail of IMEI numbers active on their network. This change will tantamount to change in license, which can only be implemented with mutual consent and not otherwise. CMOs are only obliged to keep black list of IMEIs which are not allowed to be registered on the network, and PTA only issues this Black List after due verification on case to case basis upon the confirmed report of stolen/lost mobile hand sets.

Imposition of this, and particular shifting of burden from importer to CMO, will create a fair chance of double taxation for the end user, as there is a wide likelihood that the IMEI charged to tax has already suffered taxation at import stage, and as there is no adjustment allowed this double taxation can not be claimed refund also, PTA said.

If somehow by incurring an upfront cost of Rs.3.4 billion over a 4 years’ time period (where in 3 years is the time period for implementation of the system) and recurring cost of Rs.400 million is to be spent, the upcoming task will be to allow international roamers on MSISDN, remove duplicate IMEIs, collect from new handsets on arrears basis, and allow all channels of import of hand sets as open, PTA said.

 PTA stated that the operator can and has in the past shown a tendency of frequently changing handsets, as the handset is changed, there will be a requirement of charging this tax, which may not be possible for the CMO as the activity is not in the hand of CMO, further if a hand set is just used for test basis the tax will be charged, without taking cognizance of the fact: that the same will not remain in use of the subscriber for a longer period. In view of the above PTA is of the opinion that:

Firstly, Custom Collectorate shall not release any shipment till the time TA holders submit TA Certificate along with NOC which include the IMEI numbers range issued by PTA.

Secondly, all retailers/distributors must keep copy of the NOC/TA certificate issued by PTA and duly verified from concerned distributor/TA holder for verification of the spot checking custom inspection team(s).

Thirdly, in order to implement this, custom intelligence shall take appropriate measures at their end by taking random sampling in different shopping malls.

PTA will continue to provide technical help as and when required by the FBR, PTA added.