ISLAMABAD: The government has introduced massive tariff rationalisation including abolition/reduction of regulatory duties on the import of 1,149 items, reduction in additional customs duties (ACDs) on the import of 7,523 items and introduced new customs tariff slabs of five percent, 10 percent and 15 percent.
Under the Finance Bill 2025-26, the government has also introduced package of customs reforms to modernise trade procedures, reduce import costs, and strengthen enforcement. The measures cover tariff rationalisation, reduction in ACDs, regulatory and exemption regime reviews, and a broad set of legislative changes aimed at digitalisation, transparency, and operational efficiency.
According to the Finance Bill 2025-26, the government has introduced new tariff slabs of five per cent, 10 per cent, and 15 per cent, replacing the older slabs of three per cent, 11 per cent, and 16 per cent under the tariff rationalisation plan. To encourage import of essential items, the zero per cent tariff slab, previously applicable to 2,201 tariff lines, has been extended to an additional 916 Pakistan Custom Tariff (PCT) codes.
National Tariff Policy: govt approves phased elimination of import duties
Furthermore, customs duty has been reduced on 2,624 PCT codes, creating a more business-friendly import environment. Revisions to the ACD regime have also been announced.
The ACD has been reduced from two per cent to zero per cent on tariff slabs of zero per cent, five per cent, and 10 per cent, covering 4,383 tariff lines (excluding 95 items which will still attract two per cent). The ACD on items under the 15 per cent slab has been reduced from four per cent to two per cent, while goods under the 20 per cent slab will now face ACD of four per cent instead of six per cent. Items with duties exceeding 20 per cent will see a drop in ACD from seven per cent to six per cent.
The government has further restructured the regulatory duty (RD) regime. RD has been removed on 554 PCT codes, and reduced on 595 codes, with the maximum RD rate lowered from 90 per cent to 50 per cent. This is expected to reduce input costs for industries and align customs with global trade practices. To limit unnecessary exemptions and improve transparency, the government has deleted 479 entries from Part-I, Part-III, and Part-VII of the Fifth Schedule. This move under the exemption regime review aims to eliminate distortion in the tax structure and minimise revenue loss.
The reforms are further reinforced by sweeping legislative changes. The government is establishing Centralized Assessment Units (CAUs) and Centralised Examination Units (CEUs) to promote transparency, speed, and uniformity in customs assessments and inspections. To bolster anti-smuggling efforts, Digital Enforcement Units (DEUs) will be deployed at key locations, using advanced technology and surveillance tools.
A Cargo Tracking System (CTS) will also be introduced to monitor cargo movements across the country, helping identify smuggled or non-duty-paid consignments while facilitating legitimate trade. In a step toward faster processing, the facility to file Goods Declarations without advance payment of duties and taxes will now be available, encouraging pre-arrival clearance.
The threshold for initiating contravention proceedings has been raised from Rs20,000 to Rs100,000, provided the recoverable amount is paid, in an effort to reduce litigation and improve enforcement focus. A penalty will now apply to unclaimed or uncleared cargo left beyond a specified period at ports, aimed at reducing congestion and clearing backlogs.
To ensure quicker resolution of disputes, the timeframes for adjudication and filing of appeals before the Appellate Tribunal have been rationalised. In an institutional overhaul, the Directorate General of Intelligence and Investigation (Customs) and the Directorate General of Risk Management System have been merged and reorganised for better intelligence gathering and targeted enforcement. Additionally, the creation of a new Directorate General of Customs Auction will streamline the auction of confiscated goods, while a new Directorate General of Communications and Public Relations will focus on improving transparency, stakeholder engagement, and public awareness of customs matters.
The reforms also introduce provisions allowing customs to hire technology specialists, auditors, accountants, and goods evaluators on short-term contracts for specialized and technical functions. A new Customs Command Fund has been set up to incentivise anti-smuggling operations and reward effective enforcement.
In a bid to plug loopholes in small parcel imports, the de-minimis limit for courier and postal parcels has been reduced to PKR 500, curbing misuse. The facility for scrapping and mutilation of goods at ports will now only be allowed for genuine requests and limited to 10 per cent of total cargo. Additionally, a new clause has been added to prevent belated and frivolous claims of ownership for goods liable to confiscation.
Finally, the government has made a firm move to curb vehicle smuggling by mandating that any vehicle with a tampered chassis will be presumed to be smuggled, regardless of whether it is registered with any Motor Registration Authority.
These comprehensive reforms reflect the government’s commitment to boosting trade competitiveness, strengthening customs enforcement, and aligning Pakistan’s regulatory framework with international best practices.
Copyright Business Recorder, 2025
Comments