FBR removes additional Customs Duty on imports in lower slabs

The Federal Board of Revenue (FBR) has announced the complete removal of Additional Customs Duty (ACD) on imported goods falling under the 0%, 5%, and 10% customs duty slabs, effective from July 1, 2025.

This significant reform is part of a broader initiative to streamline Pakistan’s tariff structure.

Alongside the ACD abolition, the FBR has also cut the Regulatory Duty (RD) on 1,022 items starting July 1, 2025. These changes are outlined in two new official notifications aimed at implementing the customs tariff reductions and trade facilitation measures.

National Tariff Policy 2025-2030

The tariff reforms align with the National Tariff Policy 2025-2030, formulated by the Ministry of Commerce, which targets:

• Eliminating ACD within 4 years
• Phasing out RD in 5 years
• Removing customs duty exemptions under the 5th schedule over 5 years
• Reducing customs duty slabs from 5 to 4 (0%, 5%, 10%, 15%)

The budgetary adjustments in the Federal Budget 2025-26 reflect these goals by promoting a more transparent tariff system and reducing production costs for industries.

Specific Changes to ACD and RD Rates

• ACD will no longer apply to goods under 0%, 5%, and 10% customs duty slabs, except for certain tariff lines charged at 2% ACD.
• For goods in the 15% slab, ACD is reduced from 4% to 2%.
• For goods in the 20% slab, ACD has been cut from 6% to as low as 0%, 2%, or 4%.
• For slabs above 20%, ACD decreases from 7% to 6%.

These adjustments aim to balance protection levels and lower business costs, especially for intermediate and capital goods vital to export and import substitution industries.

The RD reductions, detailed in SRO 1152(I)/2025, include:

• Substantial 50% and 20% cuts on approximately 1,000 PCT codes
• Maximum RD rate slashed from 90% to 50%, aligning with international standards
• Retention of RD on over 900 PCT codes, primarily for consumer goods to protect local industries
• This approach balances trade facilitation with safeguarding domestic production.

These reforms are expected to foster industrial growth, reduce import costs, and encourage export-oriented manufacturing. The streamlined customs duties and lowered regulatory barriers will make Pakistan’s trade environment more predictable and competitive on a global scale.