Pakistan’s tariff rationalization policy is expected to have a multi-billion-rupee impact on revenue generated from imports, with official documents revealing substantial losses resulting from lower customs duties and reduced additional customs duty rates.
The biggest hit is expected to come from the reduction in customs duty on imported vehicles and auto parts, which alone is projected to reduce government revenue by more than Rs35 billion.
According to official documents, the reduction in customs duty on imported vehicles and their parts will result in a revenue loss exceeding Rs35 billion.
The documents state that customs duty on imported vehicles with engine capacities ranging from 850cc to 1,800cc has been reduced by 35% to 50% under the tariff rationalization policy.
Auto parts, motorcycles also receive duty relief
The policy also introduces lower customs duties on auto parts and motorcycles.
Customs duty on imported auto parts has been reduced by 10%, while the duty on imported motorcycles has been cut by 20%, according to the documents.
The tariff rationalization measures also include a 2.2% reduction in additional customs duty on several imported products. The reduction applies to the auto sector, vegetable oil, gold, silver and mobile phones.
Official documents indicate that abolishing additional customs duty on certain items and reducing the rate on others will result in a further revenue loss of Rs47.6 billion.
Overall revenue expected to decline
The documents further show that the cumulative impact of the tariff rationalization measures will significantly reduce import-related revenues.
Overall, government revenue is expected to decline by Rs65.57 billion as a result of the revised tariff structure.
The measures are part of the government's broader tariff rationalization policy aimed at restructuring import duties, although the changes are expected to reduce customs revenue by billions of rupees.
