Handset manufacturers are on alert after it emerged that the
is considering placing an import tax on mobile phones with built-in GPS and TV.
Sources estimate the move could increase the cost of
handsets by up to 25% – at a time when the industry is already addled by the
current economic crisis.
Mobile phones are duty free under the 1996 Information Technology
Agreement. The EU is now in the process of deciding if handsets with additional
features (such as GPS, radio, television or cameras) should be classed within
the same agreement.
One source at a top handset manufacturer said: ‘There would
be huge ramifications. I think people would have to look into EU production.’
One source at another leading manufacturer added: ‘It will
be interesting to see
if they can get away with this. On one hand they are trying to reduce roaming
rates and then they are thinking of whacking an import tax on handsets.’
Analysts said the move could impact heavily on operators as
well as handset manufacturers. One analyst said the idea ‘is not good news’. He
are not many operators that can increase subsidies at the moment.’
The European Commission said mobile devices with the extra
features would be more appropriately referred to as ‘apparatus with multiple
functions, including mobile telephony’ as they are ‘more than just mobile
The European Commission added that discussions are ‘ongoing’
and it has not made a formal decision as of yet. ‘The Commission will take the
arguments of all stakeholders (including the industry) into account before
taking any decision,’ it said.
It is thought that the tax on GPS-enabled devices is due to
increasing pressure from European handset manufacturers in Germany and the Netherlands.
The import tax is heavily opposed by the European
Information and Communications Technology Association, supported by companies
such as Apple, Sony Ericsson, Motorola and LG Electronics.
Features that could be taxed
Personal digital assistant