ISLAMABAD: In its Competition Assessment Study on the Gold Market in Pakistan, the CCP said a patchwork of Statutory Regulatory Orders issued by the Federal Board of Revenue has created overlaps and inconsistencies that discourage formal participation and incentivise smuggling and under-invoicing.
The report noted that regulation of the gold market is spread across multiple institutions, including the Ministry of Commerce, the FBR, the State Bank of Pakistan, the Trade Development Authority of Pakistan and the Pakistan Gems and Jewellery Development Company. This fragmented structure, it said, results in conflicting rules on taxation, documentation and trade authorisation, increasing compliance costs for traders.
According to the study, key regulations governing the sector include SRO 760(I)/2013 on import and export controls, SRO 924(I)/2020 on anti-money laundering and counter-terror financing requirements, and SRO 297(I)/2023 introducing differential tax rates. The Sales Tax Act, 1990 imposes an 18% tax on gold imports, with reduced rates for domestic jewellery manufacturing, while the Income Tax Ordinance, 2001 applies withholding and presumptive taxes.
The CCP said the suspension of SRO 760 has further added to regulatory uncertainty, while weak enforcement of hallmarking standards and high compliance costs continue to distort the market in favour of informal trade.
The study also highlighted financial pressures on exporters, including a 1% cash margin requirement on imports, duplicate taxation on exports and cash withdrawals, and high costs associated with obtaining ATA Carnets through private intermediaries. Mandatory random testing of jewellery by customs authorities was also cited as a source of delays and damage to shipments.
While the FBR remains the primary fiscal regulator for the gold sector, overseeing taxation, customs enforcement and anti-smuggling efforts, the report said its effectiveness is undermined by structural challenges and limited coordination with provincial authorities. Porous borders with Afghanistan and Iran were identified as a continuing channel for illegal inflows of gold.
Measures such as mandatory CNIC reporting for high-value transactions, track-and-trace systems and cash transaction reporting have been introduced to document trade, but the CCP said weak enforcement and lack of system integration have limited their impact.
The watchdog concluded that without policy harmonisation, stronger institutional coordination and consistent enforcement, Pakistan’s gold market will continue to face transparency issues and uneven competition.
