FBR Expects 154% Increase in Tax Revenue From Imported Mobile Phones

The Federal Board of Revenue (FBR) is expecting to generate Rs. 56 billion of revenue on account of taxes/duties on commercial import of mobile phones/devices in 2019-20 i.e. a 154 percent increase compared to Rs. 22 billion during the same period of last year due to the implementation of Device Identification Registration and Blocking System (DIRBS).

This has been stated in “DIRBS Impact Case Study, Cleaning up Pakistan Mobile Ecosystem”, conducted by Pakistan Telecommunication Authority (PTA).

According to the study the taxes/duties collected from individual consumers rose to Rs. 4.14 billion during the period 15th January 2019 to 12th February 2020, an untapped area, and no revenue was collected before DIRBS’ implementation.

On the commercial import side, the revenue of Rs. 22 billion during the last fiscal year 2018-19 rose to Rs. 28.3 billion in just the first six months of the fiscal year 2019-20. According to FBR, this figure is expected to rise to Rs. 56 billion by year-end, a phenomenal increase of almost 154 percent, during a period of economic crisis.

Implementation of DIRBS also created a level playing field for the establishment of local assembly plants for mobile device assembly that enabled local job creation. Recently, some of these local entities have started to assemble 4G Smartphones in Pakistan which is an encouraging step towards digitization and building an affordable ecosystem.

The study stated that during 2019, 14 companies assembled 11.7 million devices and created 8000 job opportunities compared to 9 companies assembling 5.2 million devices and creating 3000 jobs during 2018.

Since the implementation of DIRBS, a total of 100 million IMEIs were paired (Pairing means an IMEI is pegged to another unique identifier such as IMSI or MSISDN) through DIRBS of which 38.8 million had a valid GSMA identifier but were duplicated and 61.7 million were not valid identifiers. The Mobile Network Operators (MNOs) and consumers twice requested and were granted extensions of the deadline for pairing.

These IMEIs have been allowed to work until the lifetime of the mobile device. The objective of pairing was to provide relief to existing consumers who did not have the opportunity to verify their devices during the purchasing process. The automatic pairing of the Mobile Phones lessened MNOs’ concerns of losing customers, and consumers’ worries of losing access.

While the non-valid devices paired with an IMEI would work till the lifetime of the device, it would not work if the paired IMEI is changed. This was done to ensure the phasing out of sub-standard devices. On the other hand pairing of a valid IMEI paired due to duplication would be re-paired by PTA if so required.

Before the launch of DIRBS, in addition to PTA, the Citizen Police Liaison Committee (CPLC) in Karachi created a call center for reporting lost and stolen devices. The need for this center arose, as street crimes became common in Karachi, mobile snatching being the most prevalent one.

The downside of this crime got even graver with the stolen mobile phones used in other illegal activities.

PTA holds a comprehensive database that includes a list of IMEIs that are blocked. These IMEIs are of mobile phones, either snatched or stolen during the last decade. This list of 1.7 million IMEIs reported after verification has been placed in the PTA stolen database and through the DIRBS put under observation if it ever appears on the network.

Blocked IMEIs Stolen Through DIRBS in 2019

The PTA has also blocked 147,444 IMEIs reported stolen through DIRBS during the year 2019. The PTA is committed to zero tolerance to stolen devices on the networks and continues to block such devices. The PTA shares the stolen device list with MNOs on an hourly basis, so that the blocking of such mobile devices takes place as soon as they are reported.

Previously, the PTA relied mainly on MNOs for compliance with its instruction. No audit mechanism was in place in case of violations by the MNOs. Resultantly, the public at large had little confidence that the devices would be blocked or returned to the owner if reported. Therefore, the number of reported devices has increased as consumers are now well-aware of the regulator commitment to the zero-tolerance policy.

DIRBS has not only been able to fulfill its primary objective- -eliminating illegal devices in the Pakistani market – but made additional contributions. Its impact will be more profound as the customized system gains maturity, and stakeholders conform to the various requirements of the DIRBS project.

The pace of implementation could be slow as it requires external stakeholders’ buy-ins and actions that slow down the pace for realization of the benefits of such a system.

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