Pakistan Adjusts Import Duties with New Regulatory Framework

The Federal Board of Revenue (FBR) of Pakistan has implemented a new regulatory duty structure impacting 657 imported items, effective July 1, 2024. This move, outlined in SRO 928(I)/2024 , replaces the previous SRO 966(I)/2022 and signifies a strategic shift in Pakistan's import duty landscape.

Targeted Duties and Strategic Exemptions

The new framework imposes regulatory duties ranging from 5% to 90% on specific imported goods. This aims to achieve a two-pronged approach: regulating imports and encouraging domestic manufacturing. However, it's important to note that several categories are exempt from these duties.

The FBR has clarified that imports under specific notifications and schedules of the Customs Act, 1969, will not be subject to the regulatory duty. This includes imports under S.R.O. 678(I)/2004, Chapter 99 of the First Schedule, and various provisions under the Fifth Schedule, provided certain conditions are met.

Promoting Local Industry Through Targeted Exemptions

The new regulations prioritize the growth of specific domestic industries. Key exemptions include:

• Temporary Imports: Imports under the Temporary Importation Scheme (S.R.O. 492(I)/2009) are exempt.
• Essential Materials for Manufacturing: Special steel round bars and rods used by seamless pipe manufacturers, electrical steel sheets, rubber aprons and cots for specific industries, and input materials for auto parts manufacturing by local vendors (S.R.O. 655(I)/2006) are all exempt.
• New Auto Entrants: Vehicles imported by new entrants under the Auto Development Policy are also exempt.

Balancing Revenue and Specific Needs

The FBR has implemented some targeted adjustments within the framework. For instance, a 5% regulatory duty will be applied to CKD/SKD kits for home appliances not explicitly mentioned in the duty table. This ensures broader coverage while maintaining a balanced approach.

Furthermore, the new regulations demonstrate sensitivity to specific products. Pine nuts (chilgoza) and roughly trimmed marble are entirely exempt from regulatory duties. Additionally, the regulatory duty on ground nuts in shell imported from Afghanistan has been reduced from 20% to 10%, reflecting a strategic consideration for regional trade.

Security Features and Duty Valuation

For vehicles with bulletproofing and other security features, the value for determining regulatory duty will be established under S.R.O. 1121(I)/2007. This ensures a clear and consistent valuation method for such specialized imports.

Impact and Long-Term Goals

This regulatory adjustment is expected to significantly impact a wide range of imported goods. It reflects the government's strategic priorities for managing trade and revenue. The detailed exemptions and duty adjustments demonstrate a nuanced approach that aims to:

• Regulate Imports Effectively: The new framework provides the FBR with a more robust mechanism to regulate imports and influence trade patterns.
• Encourage Local Production: By making imported goods relatively more expensive, the regulatory duties incentivize domestic manufacturing, potentially creating jobs and boosting the Pakistani economy.
• Optimize Revenue Collection: The additional duties are expected to generate significant revenue for the government, which can be used for further economic development initiatives.

A Balanced Approach for Economic Growth

The FBR's new regulatory duty framework signifies a strategic shift towards a more controlled import environment. The exemptions ensure that critical imports and materials for essential industries remain accessible. This balanced approach aims to promote domestic manufacturing while maintaining economic stability and optimizing government revenue collection.

Effective July 1, 2024, this new framework marks a significant development in Pakistan's import duty landscape. It remains to be seen how these adjustments will influence trade patterns and contribute to the country's long-term economic goals.

This article was published at FBR Imposes New Import Duties on 657 Items (SRO 928(I)/2024)