The federal government has decided to significantly reduce import taxes under its proposed National Tariff Policy 2025-30, aiming to lower trade costs, stimulate economic activity, and enhance the competitiveness of Pakistan’s economy.
According to the proposal, the government plans to gradually reduce customs duties, regulatory duties, and additional customs duties over the next five years. The reforms would bring the overall average tariff rate down from 20.19 percent to 9.70 percent, representing a reduction of more than 50 percent.
Officials believe the tariff reforms will make imported goods and industrial inputs more affordable, encourage trade, and increase competition across various sectors of the economy.
Despite the expected economic benefits, the policy could result in a revenue shortfall of approximately Rs. 143 billion for the government. However, policymakers expect increased business activity, investment, and trade volumes to offset some of the revenue losses over time.
Under the proposed framework, the maximum customs duty rate would be capped at 15 percent within five years. Additional customs duties, which currently reach up to 6 percent, would be gradually abolished, while regulatory duties would be restricted to a maximum of 20 percent before being phased out completely.
The government also intends to reduce the average import duty rate to 16.56 percent during the transition period, creating a more predictable and business-friendly tariff structure.
The proposed National Tariff Policy is expected to be implemented gradually between 2025 and 2030, subject to formal approval by the relevant authorities.
Expected Economic Impact
If implemented, the policy could:
- Lower the cost of imported raw materials and machinery.
- Improve the competitiveness of local industries.
- Encourage foreign investment and trade.
- Reduce production costs for manufacturers.
- Increase consumer access to a wider range of products.
- Align Pakistan’s tariff regime more closely with international trade standards.
Economists generally view tariff rationalization as a key step toward improving productivity and integrating the economy into global supply chains, although the success of the reforms will depend on effective implementation and support for domestic industries during the transition period.
