Pakistan Approves Major Tariff Reform to Boost Competitiveness and Reduce Inflation

The reform aims to make imports more affordable, encouraging export-led growth, and reducing the current account deficit. Prime Minister Shehbaz Sharif has approved a major tariff reform, capping customs duty at 15% and phasing out additional and regulatory duties over the next four to five years. The policy is expected to help reduce inflation, attract foreign investment, and generate new employment opportunities.

Key Takeaways:

• The reform will cap customs duty at 15% and phase out additional and regulatory duties over the next four to five years.
• The policy aims to make imports more affordable, especially for raw materials and machinery, while encouraging export-led growth.
• The number of tariff slabs will be reduced from the current 13 to four, simplifying the import process for businesses.
• The reform is expected to reduce the current account deficit and encourage legal imports, helping the government increase revenue collection.
• An implementation committee has been formed to ensure a smooth rollout of the policy.
• The policy is expected to attract foreign investment, generate new employment opportunities, and help reduce inflation.
• Prime Minister Shehbaz Sharif has emphasized the need to boost exports and improve inflation control through this reform.

Statistics:

• Pakistan currently imposes additional customs duties ranging from 2% to 7% and regulatory duties from 5% up to 90%.
• Total duties in some cases exceed 100%, making imports unaffordable for businesses.
• The reform aims to eliminate these extra charges and cap customs duty at 15% to simplify trade and improve compliance.
• The current account deficit is expected to be reduced through this policy.
• The government aims to increase revenue collection through the promotion of legal imports.

Sources:

• Prime Minister's Office
• National Tariff Policy (no specific date mentioned)