ECC approves policy for local manufacturing of mobile phones

ISLAMABAD: The Economic Coordination Committee (ECC) of the federal cabinet on Thursday approved Mobile Device Manufacturing Policy to promote local manufacturing and assembly of mobile phone handsets.

The policy was approved in a meeting of the ECC chaired by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh. It is also aimed at ensuring localisation production of mobile phone parts.

The meeting was informed that under the Mobile Device Manufacturing Policy, parts of mobile phone handsets will be used for the entire range of mobile phone handsets produced in Pakistan instead of limited to a particular model.

The policy will have a positive impact on allied industry including packaging and plasting. The expected arrival of high end brands will give local industry an opportunity to become part of the global value chain.  In addition, research and development centres and an ecosystem for software application will be set up under the policy.

The ECC discussed various recommendations proposed as part of the policy and the removal of regulatory duty for completely knocked down (CKD/SKD) manufacturing by PTA-approved manufacturing under input/output Co-Efficient Organization (IOCO) import authorisation.

The meeting also approved the removal of Fixed Income Tax on CKD/SKD manufacturing of mobile devices up to $350 category. The will be an increase in Fixed Income Tax on $351-500 category phones by Rs.2000, and more than $500 worth phones by Rs.6300. It also approved removal of Fixed Sales Tax on CKD/SKD manufacturing of mobile devices.

The PTA shall allow activation of handsets manufacturing in the country under import authorization of inputs by IOCO in CKS/SKD kit (8517.1211) and not under HS Code 8517.7000 which related to parts. This will eliminate misdeclaration in parts category at the import stage.

ECC also approved activation of Completely Built Units (CBUs) imported through notified routes after payment of all levied duties and taxes. In up to $30 category, words ‘except smartphones’ shall be inserted for CBU imports to avoid misdeclaration.

Local manufactures will receive R&D allowance of 3% for exports of mobile phones. Locally-assembled phones will be exempted from four percent withholding tax on domestic sales.

Pakistan Engineering Development Board (EDB) will act as the secretariat of Mobile Phone Manufacturing Policy and ensure the development of allied parts, components and devices.