Local consumption: Goods imported thru Sost border to get tax relief
ISLAMABAD: The federal government, Gilgit Baltistan government, and local traders’ Supreme Council, on Wednesday, inked an agreement on exemption of sales tax, income tax, and federal excise duty (FED) on imported goods meant for local consumption through Sost border area (Pak-China border).
Federal Minister for Power Division Sardar Awais Ahmad Khan Leghari, along with the Gilgit-Baltistan Chief Minister, Senator Saleem Mandviwala, Chairman of the FBR, Board Members, and Business Community representatives, announced this while addressing a joint press conference at FBR Headquarters Auditorium.
Minister for Power Awais Leghari announced that the decision will directly benefit the people of Gilgit-Baltistan and ensure smooth operations of the Silk Route’s Dry Port at Sost.
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Sharing details of the agreement, FBR Chairman Rashid Mahmood said that the customs duties, regulatory duties, and additional customs duties would continue to be collected on the imports from the Sost border area.
The FBR Chairman hoped that the revenue collection from Sost border would further increase after the implementation of this new agreement.
A detailed mechanism has been chalked out to regulate imports from the Sost border for not charging consumption taxes on items specifically imported for the Gilgit-Baltistan area, he maintained.
The federal government shall not collect these taxes of FBR on imports through Sost, such as sales tax, income tax, and federal excise duty, whose applicability has not been extended to the area of Gilgit Baltistan. This is subject to the condition that the imported goods are only meant for local consumption within the territorial jurisdiction of Gilgit-Baltistan, the FBR Chairman said.
Under the agreement, it has been agreed that the goods are imported by local firms and companies owned by the indigenous people, duly authorised by the Gilgit-Baltistan government.
Another condition of the agreement is that the goods declaration would be filed before the Pakistan customs without any mis-declaration.
The goods upon appraisement by Pakistan Customs fall within the positive agreed tariff lines as prescribed in the agreement.
The list of positive agreed tariff lines would cover imported goods needed by the indigenous people within Gilgit-Baltistan without the risk of being sold in the tariff area.
It has also been agreed among the parties that the total amount of tax exemption would not exceed Rs 4 billion per year. Any goods imported beyond the exemption limit shall not be entitled to any exemption, even if authorised.
The agreement follows days of negotiations held at the Federal Board of Revenue (FBR) headquarters in Islamabad, with all key stakeholders present, including the Federal Minister for Power Division, Chairman FBR, representatives of the GB Government, and local traders’ associations.
Trade activities at the Sost border had been suspended due to an ongoing protest by traders, who were demanding tax exemptions and the right to freely import goods from China for local consumption without the imposition of federal taxes.
The deadlock prompted Prime Minister Shahbaz Sharif to form a 22-member high-level committee under the chairmanship of Federal Energy Minister Awais Leghari, tasked with addressing concerns over tax policies and the clearance of stuck consignments imported via the Khunjerab Pass.
According to the agreement, the total value of annual tax exemptions will be capped at PKR 4 billion, and a first-come, first-served digital quota system will be implemented through Pakistan Customs’ WeBOC system.
The GB Government will be responsible for verifying and authorising importers and managing quota allocations in coordination with federal authorities. To ensure transparency, complete details of tax-exempt imports, including importer names and product categories, will be published on both FBR’s and the GB Government’s official websites.
The agreement also includes strict compliance and enforcement measures. Traders will be required to file accurate goods declarations, and any mis-declaration or unauthorised resale of goods outside GB will result in penalties.
The customs authorities will retain the right to take legal action in such cases. Moreover, the tax exemption scheme will be reviewed every two years; or sooner if needed, based on the recommendations of the GB Government and recognised trade bodies.
In case of any disagreements regarding the implementation of the agreement, parties will first seek resolution through mutual consultation and negotiation. If unresolved, disputes may be referred to arbitration under the Arbitration Act of 1940.
The signing of the agreement also paves the way for the clearance of previously stuck consignments at the Sost port, a long-standing grievance of the local trading community.
Copyright Business Recorder, 2025