Illegal mobile handset imports
Mobile phone vendors are calling for a further tariff cut on the duties on imported handsets, to curb illegal imports. “It is difficult for us to compete in the market and the customers are not getting a genuine product because of the duties on the handsets,” Ashok Pathirage, Chairman Softlogic (Pvt) Ltd, agents for Nokia said, adding that as much as 40 percent of the total imports are illegal.
He said the taxes add up to 10 percent on a handset price and estimated the loss to the government revenue on illegal imports at Rs. 500 million per annum. “The government has to make sure that the Customs Department is doing their job and stop the illegal imports. There are many who hand carry handsets and also import it undeclared,” he said. “The other alternative is to reduce the duty, because the first option is very difficult to execute,” he said.
The duty on handsets was reduced from 20 to 10 percent in 2005, when the situation was much worse. “But now we need further tariff reduction because the market has expanded and we find it difficult to sustain ourselves,” Pathirage explained.
He estimated the total handsets required as 1.2 million a year in Sri Lanka. “In India and Bangladesh the tax is negligible and we have pointed this out to the authorities,” he said.
He suggested that the government could follow suit by charging a fee from the operator at the time of a customer purchasing a connection. “That way it is easier for the government to collect taxes as well, because they have to do it from only a handful of operations rather than a gamut of vendors,” he said.