IT ministry wants zero duty on 40 computer items

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (May 11 2009): The Ministry of Information Technology (MoIT) has proposed zero duty for at least 40 items related to computer and mobile accessories in the next year's federal budget. The Ministry has also suggested that mobile banking should also be exempted from Federal Excise Duty (FED).

Official documents available with Business Recorder suggest that most of the concerned ministries do not oppose the proposals and has left it to the Federal Board of Revenue (FBR) to take final decision.

The details of the items on which duty is expected to be slashed in the federal budget are:

1) ISDN terminal adapters: This device is used to connect the computer with internet and is integral to providing broadband connectivity. Reduction in duty from 5 to zero percent would support the broadband proliferation policy of the government. Low-cost terminal devices would reduce the ultimate cost of the broadband connectivity and encourage new horizons of business opportunities in the fields of information technology and science like work from home as opted by call centres.

2) Subscriber and equipment: Subscribers and equipment are used by subscribers to connect the computer and other LAN devices with internet and its integral to providing the broadband connectivity through DSL, Fiber Optic, CDMA, GSM, WiMax, LTE, WiFi technology. The Ministry is of the view that reduction in duty would support the broadband proliferation policy of the government. Low-cost devices would reduce the ultimate cost of the broadband connectivity and encourage new horizons of business opportunities.

3) Set top boxes for gaining access to internet: The set top boxes provide data and digital content sharing facility. Digital content production and transportation has a tremendous potential and would be one of the major requirements of the IT and telecom industry. Reduction in tariff would help in offering future information technology services at affordable rates.

4) Attachments for telephones: Several devices are used for R&D purposes to develop new communication products and are generally used by IT companies. Reduction in duty rate will encourage technology companies engaged in R&D activities and related production development.

5) Apparatus operated by coins, bank notes, bank cards, token or by other means of payment: The reduction in customs duty from 20 to zero percent will promote broadband based ancillary ICT services. This will boost e-commerce in the country.

6) Discs for laser reading system and reproducing systems phenomena other than sound image: According to the MoIT, the digital era encapsulates the trend that digital contents are preferred over printed media. Many universities and other organisations keep their educational, promotional and training materials in digital formats. Reduction in tariff from 5 to zero percent would encourage paper less environmental and help encourage automation in the country.

7) Multimedia memory cards (MMC), SD cards: These are the latest mini storage on the go devices which are used in a variety of input and output devices like computers, laptops, handheld devices, etc. A reduction in their duty would encourage utilisation of digital content sharing and hence promote IT in the country.

8) Other Multimedia storage devices capable of connecting to an automatic data processing machine: Multimedia storage devices are widely used by IT companies in copying and transporting digital contents for processing and managing outcomes.

9) SIM cards: Reduction in duty will promote SIM cards for the research and development of new products and innovating new technologies. Reduction in tariff from 5 to zero percent would encourage the research and development activities to develop new products.

10) Reproducing representations of instructions, data sound and image, recorded in a machine readable binary form and capable of being manipulated or providing interconnectivity to a user by means of an automatic machine: The MoIT is of the view that this device is widely used by IT companies for research and development of new products and innovating new technologies. Reducing tariff would encourage the research and development activities and developing new products.

11) Blue tooth whether or not capable of connecting to an automatic data processing machine: The ministry observes that reduction in duty will promote blue tooth based broadband and ancillary ICT services particularly e-Commerce in the country.

12) VSAT terminals: Although optic fibre is widely provided by the telco operators but still a considerable area is not optic fibre-enabled to provide connectivity. VSAT is always helpful in providing connectivity in these areas; and additionally providing excellent backup connectivity to the IT companies and other offices connected through optic fiber. Redundant connectivity is extremely important to flourish the information technology and science industry.

13) Other (used monitors other than CRT). CRT monitors are more power-consuming and hazardous radiation emitting devices: Contrary to this, LCD and Plasma displays are power-efficient and environment-friendly devices and are widely used by all segments of IT industry and other sectors of the economy and the general public. Due to present energy situation in the country, the Ministry observed that it is an essential item and should be exempted from levy of customs duty. Presently, 25 percent customs duty is applicable on this item. Similar proposal has been forwarded to the FBR for used LCDs.

14) Multimedia projector: Like other sectors of the economy Multimedia projectors are also commonly used by the IT companies in Multimedia presentation, trainings, seminars and conferences. The reduction in duties would reduce the cost of doing business and help promote this nascent and high tech sector particularly the BPO sector.

15) Branchless banking services (mobile banking etc) on PSTN/WLL/ cellular mobile networks by telecom/TPSP/CVAS licenced operators: Ministry of Finance, Ministry of IT, State Bank of Pakistan and other stakeholders have engaged international consultants for promotion of citizens' access to financial services, especially through available ICT infrastructure. Mobile banking is suggested as the most feasible and practical value-added data service for attaining these objectives. It has been requested that FED on branchless banking services (Mobile banking, etc) be exempted from FED.

16) Cellular mobile phone set: Present tax regime of taxes/duties on cellular mobile import/sale in different phases creates negative perception of double/triple taxation and also hindering the growth of FDI in telecom sector. MoIT is of the view that one lump sump flat duty of Rs 500 should be imposed at import stage without any RD and SRO 534 (I)/2008 may be abolished. The Ministry has also proposed reduction in duty on IC, diode, resistor, capacitor, transistor, batteries, buzzer, line jack, handset jack, hook switch, display, power jack, receiver, line cord, handset cord, handset with Mic, ABS resin and copper claded sheets.

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