New taxation proposals to help generate additional revenue

The Federal Board of Revenue (FBR) may increase regulatory duty from 5 to 10 percent on the import of luxury and non-essential items under SRO. 568(I)/2014, 15 to 20 percent RD on certain items, impose special excise duty (SED) on cement and cigarettes, zero percent customs tariff slab raised to one percent and one percent increase in all duty slabs on the import of items from China under Free Trade Agreement (FTA). It is reliably learnt on Friday that these are merely taxation proposals for generating additional revenue during 2015-16 and nothing has been final in this regard. The revenue generation measures may include major changes in the SRO. 568(I)/2014 relating to the imposition of 5 percent regulatory duty on the import of 282 luxury and non-essential items. The federal government is expected to raise regulatory duty on the import of many goods falling under the relevant Pakistan Customs Tariff (PCT) code of the First Schedule to the Customs Act specified in the notification. However, RD may not be raised on iron and steel products and cotton yarn.
In June 13, 2009, regulatory duty (RD) was imposed on 397 items through SRO 482 (1)/2009. Some changes are expected in the rates of the RD on the import of certain items. There is a possibility that the zero percent tariff slab under Pakistan Customs Tariff may be replaced with one percent duty slab to generate additional revenue. Another proposal under examination is to raise duty on Chinese items by one percent under FTA. For example, zero percent duty slab may be replaced to one percent, 5-6 percent and import tariff may be raised 10 to 11 percent etc under Pak-China FTA.
It is further learnt that the SED may be imposed on the cement and cigarettes. However, items to be brought under the SED regime have yet to be finalised. The regulatory duty may not be levied on the imports under Notification No S.R.O. 678 (I)/2004 dated the 7th August, 2004; imports under Chapter 99 of First Schedule of the Customs Act; imports under Fifth Schedule to the Customs Act subject to fulfilment of conditions laid therein; imports under the Baggage Rules,2006; imports under sub chapters 3 and 7 of chapter XII and chapter XV of Customs Rules, 2001; imports under Small and Medium Enterprises and Export Oriented Units Rules, 2008 and imports under Temporary Importation Scheme vide S.R.O. 492(I)/2009, dated the 13th June, 2009.