Pakistan Reduces Duty and Tax Rates Under Foreign Agreements

Pakistan Reduces Duty and Tax Rates Under Foreign Agreements

Karachi, December 29, 2023 – Pakistan has unveiled a set of reduced rates for duty and taxes on goods imported from countries with which it has established foreign trade agreements.

The move, outlined in the updated Customs Act, 1969 for the tax year 2024, provides clarity on the determination of origin and rates of duty and taxes under these agreements.

Key provisions of the updated Customs Act include:

1. Lower Rates under Trade Agreements: Where a trade agreement exists between the Government of Pakistan and a foreign country or territory, stipulating duty rates lower than those specified in the First Schedule, the Federal Government has the authority to establish rules. These rules, published through official Gazette notifications, will determine whether an imported article is the produce or manufacture of the foreign country or territory. Importers will be required to make claims at the time of importation, supported by evidence as prescribed in the rules, for assessment at the appropriate lower rate under the agreement.

2. Preferential Rates of Duty: In cases where a preferential rate of duty is specified in the First Schedule or is admissible by virtue of a notification, the duty to be levied and collected will default to the standard rate unless the owner of the article claims, at the time of importation, that it is eligible for a preferential rate. The article must be determined, in accordance with the rules, to be the produce or manufacture of the preferential or free trade area as notified under sub-section (3).

3. Definition of Preferential Area or Free Trade Area: The Customs Act defines “preferential area or free trade area” as any country or territory that the Federal Government declares to be such an area through official Gazette notifications.

4. Government’s Authority to Adjust Rates: Notwithstanding the provisions in sub-sections (1) and (2), the Federal Government retains the authority to take immediate action in the interests of trade, including the promotion of exports. This includes discontinuing, increasing, or decreasing preferential rates for specific articles specified in the First Schedule. The government can make such adjustments through notifications in the official Gazette.

This initiative aims to streamline and incentivize trade with partner countries, fostering a conducive environment for importers and exporters alike. By facilitating reduced duty and tax rates, Pakistan seeks to bolster economic ties and create a more competitive marketplace.

The Customs Act revisions provide a comprehensive framework for the assessment and determination of duty rates under foreign trade agreements. The move is expected to encourage businesses to explore new markets, strengthen existing partnerships, and contribute to the growth of the national economy.

As Pakistan positions itself as a key player in the global trade landscape, these measures underline the government’s commitment to creating an open and attractive environment for international commerce. Businesses and stakeholders are encouraged to stay abreast of these changes and leverage the opportunities presented by the revised Customs Act to further their trade interests.