Latest news with #PakistanCustomsTariff
Business Recorder
31-07-2025
- Business
- Business Recorder
FBR for testing products imported under PCT Headings thru reputable lab
ISLAMABAD: The Federal Board of Revenue (FBR) has directed Collectors of Customs to ensure that the products imported under newly-created Pakistan Customs Tariff (PCT) Headings are tested through a reputable laboratory to check any misuse of newly-created PCT codes from July 1, 2025. In this regard, the FBR has issued instructions to the Collectors of Customs. The FBR said that two new PCT Codes 4810.9210 and 3920.1010 have been created. (a) The PCT code 4810.9200 has been bifurcated into 4810.9210 and 4810.9290. The description for PCT code 4810.9210 is specific i.e. multi-ply - "clay coated paper and paperboard exceeding either 370mN or 325 gsm for aseptic liquid food packaging" and is chargeable to customs duty at the rate of 10 percent, while the other bifurcated PCT code 4810.9290 is chargeable to customs duty at the rate of 20 percent. The chief collectors of appraisement and all collectors are directed to ensure that the products imported under 4810.9210 are tested through a reputable laboratory to ensure that they have the requisite specification as required under the said PCT code to check any misuse of this newly created PCT code, the FBR directed. (b) Similarly, the PCT code 3920.1000 has been bifurcated into 3920.1010 and 3920.1090. The description of 3920.1010 is specific i.e. of polymers of ethylene "Mineral filled film of Polyolefins for aseptic liquid food packaging" chargeable to customs duty at the rate of 10 percent, while the other bifurcated PCT code 3920.1090 is chargeable to CD at the rate of 20 percent. The chief collectors of appraisement and all collectors are directed to ensure that the products imported under 3920.1010 are tested through a reputable laboratory to ensure that they have the requisite specification as required under the said PCT code to check any misuse of this newly-created PCT code, the FBR added. Copyright Business Recorder, 2025
Business Recorder
29-07-2025
- Business
- Business Recorder
Yarn, grey cloth, raw cotton removed from EFS purview
ISLAMABAD: The Federal Board of Revenue (FBR) has excluded cotton yarn, grey cloth and raw cotton from the purview of the Export Facilitation Scheme (EFS) and would now be charged at the standard rate of 18 percent sales tax at the import stage. Under SRO.1359(I)/2025 issued by the FBR on Tuesday, these three items have been excluded from zero-rating facility under the EFS scheme and therefore cotton yarn, grey cloth and raw cotton now chargeable under standard rate regime of sales tax. The FBR has issued an SRO 1359(I)/2025 to propose amendments in the Export Facilitation Scheme on Tuesday. Details revealed that there was a major issue pending between the spinning mills and exporters since last one year. Last year, local supply of 'yarn' was excluded from the EFS facility and sales tax was imposed on local supply of yarn. They argued that the imported yarn was subjected to exemption, but no exemption on local supplies. ST, duty exemptions on imported cotton, yarn being withdrawn, Aurangzeb tells NA Resultantly, people switched to imported Yarn which disturbed the working and business of local spinning mills. Local sales of 'Yarn' were also affected due to switching over to imported 'Yarn'. Now, after chargeability of 18 percent sales tax on the import of yarn, grey cloth and raw cotton, the importers would be required to seek sales tax refunds. There is confusion in the new SRO that whether 'micro fabrics' is subjected to sales tax or not under the revised EFS scheme, sales tax expert added. According to the SRO.1359(I)/2025, under the revised EFS, the 'insurance guarantee' means a guarantee issued by an insurance company duly notified by the Board, having Pakistan Credit Rating Agency rating of AA++, on such format and conditions as prescribed by the Board. The revised scheme said that the import of compressor scrap and motor scrap shall be allowed for copper content only. The raw cotton, cotton yarn and grey cloth falling under the respective headings of Pakistan Customs Tariff shall be excluded from the scope of EFS. Provided that import consignments of raw cotton, cotton yarn and grey cloth with bills of lading issued within ten days of the issuance of this notification shall he allowed under this scheme. 'Till the notification of the format of insurance guarantee by the Board, the EFS users shall be required to submit bank guarantee, wherever applicable', SRO 1359(I)/2025 said. Copyright Business Recorder, 2025
Express Tribune
13-07-2025
- Business
- Express Tribune
New tariff policy – have we liberalised enough?
Listen to article The new National Tariff Policy (2025-30), as revealed by the Finance Act 2025, budget speech and FBR notifications, aims to enhance the competitiveness of the manufacturing sector, including exports, by providing cheaper access to imported raw materials and intermediate goods through a rationalised tariff structure. This policy is designed to increase employment opportunities, improve consumer welfare, and remove anomalies in the tariff structure that cause distortions between sectors and within value chains. The new tariff policy will lead to the reduction of average effective customs tariff from 20.19% to 9.70% over five years. This reduction will be achieved by readjusting the customs duty (CD) slabs to four levels: 0%, 5%, 10%, and 15%, down from the existing five slabs. The maximum CD rate will be reduced to 15% within five years, and regulatory duties (RDs) and additional customs duties (ACDs) will be eliminated within five and four years, respectively. The policy outlines specific targets for tariff rationalisation. For instance, the base year for these changes is 2024-25, excluding Chapter 27 of the First Schedule to the Customs Act, 1968. The existing five CD slabs will be transformed into four slabs over five years, with annual targets for reducing CD rates. The elimination of ACDs will follow a similar timeline, with a gradual reduction in ACD rates for products subject to the auto sector policy (AIDEP 2021-26) starting from July 1, 2026. The RD slabs will be completely eliminated within five years. Our team has analysed the revised tariff structure thoroughly, and while we will publish these results in a report shortly, some of the findings raise questions over the credibility of claims made by the government. There is a group of 292 Pakistan Customs Tariff (PCT) codes, which include food and agriculture, chemicals, textiles and machinery, where CD has been slashed from 16% to 15% and ACD from 4% to 2%. This may be considered a 50% reduction in ACD, however, the effective change will not be huge on these items because of the overall tariff structure. Another group of products including food and agriculture, chemicals, textiles and machinery, comprising 2,225 HS codes, with higher level of CD at 20%, saw no change, though ACD has been reduced from 6% to 4%. There are 468 items under the highly protected category attracting 30% to 100% CD, including food and agriculture, chemicals, electrical equipment, machinery, iron and steel, base materials, rubber, glass and glassware, and vehicles, which saw no change in CD and a marginal reduction in ACD from 7% to 6%. This suggests that the impact on the level of import will be insignificant. There is apparently more significant reduction in RD, which is applied to around 2,000 HS codes. In the group including chemicals, wood and articles, textiles and clothing, machinery and equipment, the new tariff policy announced a reduction in RD from 5% to 2.5%. The changes in RD will take effect in four to five years. Highly protected sectors like agriculture, chemicals, and mineral products witnessed a 50% reduction in RD (from 10% to 5%), with plastics seeing a drop from 15% to 7.5%, suggesting broader relief in many intermediate and essential goods. Auto sector, with all its parts, continues to be protected with higher slabs of 35% to 100%, until the current auto policy expires in 2026. On a positive note, the Fifth Schedule, which includes exemptions, will be changed. A total of 479 tariff entries with the same or lower CD rates in the First Schedule will be deleted from the Fifth Schedule. These entries fall under Part-I (Machinery), Part-III (Poultry & other goods), and Part-VII (miscellaneous goods). Part-VII (miscellaneous goods) will be omitted, and two entries from Part-VII will be shifted to Part-III (Poultry & other goods). There should not be any exemptions in CD. Where needed, 0% slab can be used. In conclusion, the National Tariff Policy (2025-30) aims to create a more transparent, predictable, and competitive tariff regime. This is possibly the most important tool for improving Pakistan's economic growth prospects in the short to medium term, while long-term structural changes in the economy will take more time. Overall direction is correct. The debate, however, is on the strategy and whether we are doing sufficient liberalisation? My short answer is in negative. The government has followed a gradual, incremental, and phase-wise approach, fearing backlash from powerful industrial groups as well as revenue loss. There is very little resistance or reaction shown by these powerful groups. This may signal that they have already calibrated their business projections accordingly without any major changes – for now. It is possible that policymakers may have also weighed in the global trade policy environment, where Trump tariffs – and associated negotiations – are driving major changes, thus diluting significant changes in the domestic trade policy. The writer is the founder and executive director of Policy Research Institute of Market Economy
Business Recorder
22-05-2025
- Business
- Business Recorder
Experts for imposing FED on alcoholic beverages
ISLAMABAD: The government can easily generate handsome amount of revenue to the tune of billions by imposing federal excise duty (FED) on alcoholic beverages in the upcoming budget (2025-26). According to tax experts consulted by Business Recorder, the tax structure surrounding alcoholic beverages, particularly beer, has been a largely neglected topic despite its substantial potential for generating significant revenue for the government. This is especially pertinent as the government is approaching the upcoming budget for the fiscal year 2025-26, where there is a pressing need for innovative revenue generation strategies. They explained that the beer is classified under the Harmonised System (HS) code 22.03. It is currently taxed under the standard rate of value added tax (VAT) mode. This classification means that beer is not subject to taxation based on the retail price, unlike many other consumer products, which are taxed on their Maximum Retail Price (MRP). This unique approach places beer in a different category compared to aerated waters and various other beverages, leading to potential revenue losses for the government. Under the Pakistan Customs Tariff (PCT) tariff, 90 percent customs duty is applicable on the import of beer/wine. An intriguing aspect of the current tax environment is the absence of a FED on the sale of alcoholic beverages, including beer. The reasons for this omission are unclear and warrant further investigation, given the significant revenue that could be derived from such a tax. Currently, due to pressing need of generating higher tax revenue target, the Federal Board of Revenue (FBR) appears to even focusing on levying more taxes on different sectors including packaged food, dairy products, packaged milk, non-alcoholic beverages, fruit juices, aerated waters, and energy drinks as areas to enhance revenue collection for the fiscal year 2025-26. This strategy may however, overlooked the lucrative opportunity that the taxation of alcoholic beverages presents. Copyright Business Recorder, 2025
Business Recorder
02-05-2025
- Business
- Business Recorder
Imports under HS Codes 3402.1300 and 3402.1190: SC dismisses petition seeking zero duty
ISLAMABAD: The Supreme Court dismissed a petition seeking zero per cent customs duty on the import of items under HS Codes 3402.1300 and 3402.1190. A three-judge bench, headed by Chief Justice Yahya Afridi and comprising Justice Muhammad Shafi Siddiqui and Justice Shakeel Ahmad decided the matter on an appeal against the Sindh High Court (SHC) verdict. The petitioner (Surfactant Chemicals Company (Pvt) Limited, Karachi) sought exemption from customs duty in excess of zero per cent (0%) vide SRO 565(I)/2006, dated 05.06.2006 as amended vide SRO 474(I)/2016, dated 24.06.2016] on the import of items under HS Codes 3402.1300 and 3402.1190. SHC judgment: SC reserves verdict on DG Customs Valuation's pleas As the respondents (Secretary Ministry of Finance & Customs Department), declined relief, the petitioner filed constitutional petitions before the Sindh High Court claiming that the goods imported by the petitioner-company were fully covered by the exemption as per Column (3) of the Table at Serial (3) of the amending SRO. The respondents stance was that they were/are neither registered/recognised by the Federal Ministry of National Food Security and Research nor were manufacturer of pesticides. The petitioner claimed that it is not required to get such registration or approval, as the petitioner by itself is not a manufacturer of any agricultural pesticides. The petitioner stated that it imports, formulates and manufactures agricultural surfactants/surface active agents namely stabilisers, emulsifiers and solvents which were used in manufacturing pesticides. The judgment noted that under the SRO the treatment of such goods on its import as zero per cent duty is not absolute; it is qualified/contingent upon terms in the SRO itself. The requisite condition in respect of goods on zero per cent in terms of Serial (3) of the Table in Column (2) is apparent which requires approval by the Ministry of National Food Security and Research which has not been fulfilled by the petitioner. The goods were imported and were classified under HS Code 3402.1190 and 3402.1300 of the Pakistan Customs Tariff. On the strength of HS Code alone, as available in the column, the treatment cannot be extended as zero per cent duty, for such goods the pre requisites are inevitable. The judgment said that the treatment of goods disclosed in the SRO were subject to fulfillment of certain obligations. The amended SRO itself put the petitioner under obligations to provide its qualification in order to fetch the exemption as it was only available for manufacturing or formulation of agricultural pesticides by manufacturers and formulators and this could only be recognized and approved by the Ministry of National Food Security and Research. The Column (2) has restricted and prescribed a condition and the treatment of goods of Column (3) in terms of exemption of customs duty could only be if condition prescribed in Column (2) is met. Admittedly, the petitioner is neither recognized nor approved by the Ministry of National Food Security and Research either as manufacturer or formulator of Agricultural pesticides. The Court said that the application of the order passed in Constitution Petition No.D-8496 of 2017 was also rightly distinguished in impugned judgment as it relates to clause 133 of the Sixth Schedule to the Sales Tax Act, 1990 and was not pari materia with the aforesaid SRO. The Restriction, as is apparent in the ibid SRO, is not seen in respect of goods disclosed in clause 133 of the Sixth Schedule to the Sales Tax Act, 1990. Copyright Business Recorder, 2025
