KARACHI: The government’s decision to tax laptops and computers through a supplementary finance bill has negatively impacted the sales by about 80 percent, said electronic dealers on Saturday as information technology experts described the measure as “counterproductive.”
Pakistan imposed five percent tax on the import of computers and laptops to meet the International Monetary Fund’s conditions, including the introduction of 17 percent uniform sales tax on about 150 items, in January to revive the lending agency’s $6 billion stalled loan program.
“Our sales have dropped to nearly 20 percent following the imposition of five percent tax and three percent additional duty,” Rizwan Irfan, president of Karachi Electronics Dealers Association (KEDA), told Arab News. “The prices of the products have surged from Rs5,000 to Rs15,000 on the lower side.”
He maintained these prices were already too high due to the exchange rate disparity between the US dollar and Pakistani rupee, adding the new taxation policy was beginning to make the situation even worse.
Other individuals involved in the business said the tax measure introduced in the “mini-budget” would discourage young Pakistani computer users who substantially contribute to the country’s exports through their freelancing and software design activities.
“Laptops are used by our young generation as tools to earn their living and contribute to Pakistan’s [information technology] exports which crossed $1 billion during the current fiscal year by December 2021,” Shabbir Hassan Mansha, convener of the Federation of Pakistan Chamber of Commerce and Industry’s Standing Committee on Customs, told Arab News.
“The government has taxed CBUs [completely built units] and these are desperately needed at a time when things are moving toward digitalization at a fast pace,” he added.
Officials of Pakistan’s leading union of software houses agreed with the observation.
“This is a counterproductive measure which is against the spirit of digitalization of economy,” Badar Khushnood, chairman of Pakistan Software Houses Association (P@SHA), told Arab News. “Laptops and computers are assets which are used to create new products or add value to the old ones. The activities generated by them strengthens the economy.”
Pakistan’s information technology exports went up by 29 percent to $251 million in December 2021, registering an overall increase of 36 percent during the first six months of the current fiscal year amounting to $1.3 billion. The country hopes to fetch $3 billion through IT exports by the end of FY22.
According to the finance ministry, the government expects to generate over Rs343 billion of additional revenue through the IMF-backed minibudget. IT experts maintain the revenue generated by taxing laptops and computers will not be substantial, though it will adversely impact the country’s digital journey.
“The tax collection through this measure will not be too high, but it will otherwise have an adverse impact,” Khushnood said, adding: “These are not the vehicles that cost millions. These products are sold somewhere between Rs100,000 and Rs200,000. This benefits individuals, small businesses and the overall economy.”
Khushnood, who also leads the private sector in the government’s National E-Commerce Council, said the authorities were “sending negative vibes by taxing these productive assets.”
“The government has been striving to achieve digital payments and digitalization of economy to ensure its documentation,” he continued. “But it is now discouraging the same process by taxing products which should actually be subsidized.”
Electronic traders and P@SHA officials informed they had approached the government, asking it to withdraw taxes on laptops, personal computers and mobile phones.
“We have written a letter to the government to revisit its decision,” said the KEDA president.
The P@SHA chairman added his association had also voiced its concern over the issue on every forum, including the PM office, commerce ministry, National E-Commerce Council, and information technology ministry.
