A recent report by the Policy Research Institute of Market Economy (PRIME) has highlighted the heavy tax burden on smartphones in Pakistan, revealing that more than half of the cost of a mobile phone is driven by taxes and regulatory duties.
The study, titled “Taxing Connectivity: How Taxes and Tariffs Deepen Pakistan’s Digital Divide,” examines how the country’s taxation structure significantly increases the final retail price of mobile devices, particularly high-end smartphones.
According to the findings, a smartphone valued at around $700 internationally (approximately Rs. 196,000) ends up costing nearly Rs. 294,500 in Pakistan after the inclusion of various charges. These include regulatory duties, sales tax, mobile device levies, withholding taxes, and PTA-related approvals.
The report states that the effective tax burden reaches approximately 50.26 percent, making Pakistan one of the most expensive markets in the region for purchasing premium smartphones.
One of the key concerns raised in the report is that such high taxation on digital devices is contributing to a widening digital divide. As smartphone prices rise, access to essential digital services, online education, freelancing opportunities, and financial technologies becomes more limited for a large portion of the population.
Industry observers argue that smartphones are no longer luxury items but essential tools for communication, education, business, and employment. As a result, heavy taxation may slow down digital inclusion and reduce overall internet penetration growth in the country.
The report also suggests that the current tax structure may discourage legal imports and encourage informal or grey-market devices, which can further reduce government revenue in the long term.
Pakistan’s mobile phone market has expanded rapidly in recent years, driven by increasing internet usage and the growth of digital platforms. However, affordability remains a major challenge for consumers, especially in the mid-to-premium smartphone segment.
Policy experts recommend revisiting the taxation framework to strike a balance between revenue generation and digital accessibility. They emphasize that reducing the cost barrier could support broader economic benefits by improving connectivity and enabling more participation in the digital economy.
The findings have sparked renewed debate about how Pakistan can modernize its tax policies while ensuring that technology remains accessible to the wider population.
