In a recent turn of events, the Pakistani gaming community has been struck by one of the most devastating pieces of news ever. The Government of Pakistan has imposed taxation on GPUs based on their VRAM specifications.
How are GPUs taxed in Pakistan
Pakistan has imposed a 17% GST (General Sales Tax) on various items including electronics since December 2021. After that, officially, there is around a 3% duty on processing units (GPUs). However, in Pakistan, additional taxes can be imposed up to 50% out of thin air.
Personal computers/Processing units
Custom Duty = 3%
~FBR (Federal Board of Revenue), PCT Code = 8471.3020/8471.5000
There have been instances where you are charged just 30% (incl. 17% GST). Whereas, a few times importers have been charged nothing at all. So it’s mostly a hit or miss. A general rule of thumb is that, the higher the cost, the more likely you are to get taxed.
Gaming in Pakistan
Being a third-world country with bigger problems than the IT sector, gaming only sky-rocketed to popularity in Pakistan around 2017-18. Back then, the recent influx in the USD to PKR conversion rate spiked up prices heavily. Those that bought a GPU in 2016 were considered to be the lucky few, but little did anyone know that things were about to get way worse.
By the end of 2017, due to a massively rising trade deficit the Pakistani Rupee (PKR) stood at Rs. 110 against $1. This was 10% higher than the previous rate (Rs. 100) which significantly bumped the prices.
PKR was never strong enough to be held at that position, so as the bubble burst, it crashed to Rs. 155 by the end of 2019. The pandemic did hold the Rupee strong, however, the still ongoing political tensions and economic instability saw the Rupee fall to Rs. 250 against the Dollar (Current Rate = Rs. 217).
This meant that the GPU you could once get for Rs. 30,000 ($300) was going to cost you ~Rs. 70,000. A butterfly effect was seen across the market and the trade deficit was still uncontrolled.
The Final Nail In The Coffin
Many importers in Pakistan were complaining as their GPUs had been seized by the customs department. After much investigation, news broke out that Pakistan is considering to levy taxes on every imported GPU. Usman Sheikh, the admin of PPG (PC Gamers of Pakistan) Facebook group was the first to share the official documentation.
The taxation will be based off the memory specifications of the GPU. So a 3060 12GB will be taxed more than a 3080 10GB. This is done to enlarge the list of goods being taxed. However, such aggressive price tags may lead to a black market.
The taxation rate will be calculated as per the assessed prices of these GPUs, which are fixed values provided by the government. Taking a conversion rate of 1 USD = 217 PKR into account, the assessed pricing according to the memory specs are as follows:
« Memory → Assessed Price (USD) | Assessed Price (PKR) | 36% of Assessed Price (PKR) »
- 4GB → $65 | Rs. 14,070 | Rs. 5,065
- 6GB → $98 | Rs. 21,215 | Rs. 7,640
- 8GB → $196 | Rs. 42,430 | Rs. 15,270
- 10GB → $262 | Rs. 56,720 | Rs. 20,420
- 12GB → $328 | Rs. 71,000 | Rs. 25,560
- 16GB → $468 | Rs. 101,315 | Rs. 36,470
- 24GB → $540 | Rs. 116,900 | Rs. 42,000
For example, assume that a 3060 costs $400 (shipping included). After arriving in Pakistan, it will initially cost you Rs. 86,000 ($400). As for these additional taxes, the 3060 falls under the umbrella of 12GB GPUs giving it an assessed pricing of $328. 36% of $328 is around Rs. 25,560. So the final pricing comes out to be Rs. 111,560. Bear in mind, additional taxation may also be imposed depending on your region.
The Community’s Reaction
While this is indeed a step towards increasing the tax collection, the community sits there outraged. Pakistan has a notorious history of spiking taxes on Internet and even Mobile Phones. Many people question the department that passed this legislation. Indeed, the frustration between the government and the locals is growing.
Enthusiasts called out the government’s IT initiative and ask whether such heavy taxes fall under the category of ‘promoting IT based services’ in Pakistan. A common speculation is that, such steps will encourage NVIDIA and AMD to set up fabs allowing GPU manufacturing in Pakistan. However, the recent ongoing economic crisis says otherwise.
A Possible Way Around This
While we do not encourage any form of tax evasion whatsoever. In Pakistan, you can legally bring GPUs in your luggage without the fear of taxation. However, this heavily depends upon your luck as you have to convince the officials that the GPU you sneaked in is actually going to be used by you.