The Federal Board of Revenue (FBR) has officially reduced Regulatory Duties (RDs) and Additional Customs Duties (ACDs) on a wide range of imported goods. These changes, part of Pakistan’s long-term tariff rationalization strategy, came into effect on July 1, 2025.
Two statutory regulatory orders (SROs) were issued to implement the changes:
- SRO.1151(I)/2025, covering the application of Additional Customs Duties
- SRO.1152(I)/2025, relating to Regulatory Duties on imports
Key Highlights of the New Policy
Reduction in Regulatory Duties (RDs):
- RDs have been lowered on 1,022 imported products.
- No RDs will apply to goods that fall under customs duty slabs of 0 percent, 5 percent, or 10 percent.
- A five-year phase-out plan aims to reduce the maximum RD rate from 90 percent to 50 percent.
- Complete exemption has been granted to 554 types of raw materials and intermediary goods.
- RDs have been reduced on 602 additional items.
Exemptions from RD under SRO.1152(I)/2025 include:
- Imports covered under Chapter 99 of the First Schedule to the Customs Act, the Fifth Schedule, and the Temporary Importation Scheme.
- Special steel bars and rods, electrical steel sheets, and specified rubber products.
- Vehicles imported in completely built-up (CBU) condition by new entrants.
- Raw materials used by local auto parts vendors under SRO.655(I)/2006.
Additional Customs Duties (ACDs) under SRO.1151(I)/2025:
Effective July 1, 2025:
- A 2 percent ACD will apply to:
- Goods under the 15 percent tariff slab
- Items imported under SRO.655(I)/2006 and SRO.656(I)/2006
- Cars, jeeps, and light commercial vehicles (CKD condition) above 1,000cc
- Heavy commercial vehicles in CKD condition
- A 6 percent ACD will apply to:
- Items under the 30 percent tariff slab
- Goods in slabs with specific rates
The value of goods for ACD purposes will be determined according to Section 25 or 25A of the Customs Act, 1969.
ACD exemptions include:
- Plant and machinery imports under Chapters 84 and 85
- Imports under Chapter 99 and the Fifth Schedule (except certain items)
- Goods brought under Baggage Rules 2006
- Items under SRO.577(I)/2005, SRO.565(I)/2006, and SRO.693(I)/2006
- Items under the Temporary Importation Scheme
- Imports by exploration and production (E&P) companies for offshore projects under SRO.678(I)/2004
- CKD vehicles up to 1,000cc and CBU vehicles up to 850cc
- Items under PCT codes 8703.8030, 8711.6040, and 8711.6060
Long-Term Tariff Reform Objectives:
- The average tariff is set to be reduced from 20.19 percent to 9.70 percent over five years.
- Customs duty slabs will be consolidated from five to four: 0 percent, 5 percent, 10 percent, and 15 percent.
- The maximum customs duty will be capped at 15 percent.
- All ACDs are planned to be removed within four years, covering approximately 7,500 tariff lines.
- Regulatory duties will be fully eliminated within five years.
- The Fifth Schedule of the Customs Act will also be gradually phased out.
- For the automotive sector, ACDs will be adjusted in line with the Auto Industry Development and Export Policy (AIDEP), starting July 1, 2026.
The FBR will continue issuing annual notifications to guide and implement these changes.
