That new iPhone you’ve been saving up for might just be about to get a whole more expensive: Imported mobile phones could be subject to customs and tax fees totaling 37.5% — including a 5% development fee tax — as part of incoming government regulations to support the country’s mobile phone manufacturing localization efforts, a high ranking government source told EnterpriseAM. The National Telecom Regulatory Authority (NTRA) and the Finance Ministry are in the process of finalizing the regulations and the decision will not be applied retroactively, the source said.

How it would work: Once a phone is activated with a new SIM card, users will have a three-month grace period before they receive a notification requiring the prompt payment of the customs and tax fees — failure to pay will result in service suspension, the source said. Devices will function normally after users pay the required fees and register the phone’s serial number.

There could be exemptions: The government is looking into setting an exemption limit depending on the value of the mobile phone being imported, with the proposed charges for phones costing EGP 15k or higher, the source added. Egyptian expats, tourists, and non-residents would be exempt from the ruling, unless they establish a permanent residence in the country.

Addressing smuggling is one of the goals: Egypt faces a great deal of smuggling of mobile phones, the source said, revealing that 99% of phones currently operating in Egypt are unregistered — which causes the state annual losses of between EGP 5-6 bn annually.

It could also boost local companies’ business: Egypt’s import of mobile phones during the first 7 months of the year were up 6.4% y-o-y, according to state information agency Capmas, a rise that has caused local firms to issue complaints to the government over not being able to compete due to both the emphasis on imports and issues related to smuggling.

The gov’t is looking to further localize mobile phone manufacturing: The finance and CIT ministries are preparing to launch an initiative to offer incentives to local mobile manufacturers that aim at increasing the local components of mobile phones produced locally. The two ministries are in the process of developing a five-year plan with companies to manufacture 100 mn devices annually — 25% of which to be allocated for the local market and the remaining 75% for export, the source told us.

** You can check out our Inside Industry rundown of the localization of our smartphone industry here.

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