LAHORE: The Federal Board of Revenue (FBR) has officially issued SRO 816(I)/2025, significantly expanding the application of a transit fee on commercial goods passing through Pakistan destined for Afghanistan.
This measure is a key component of a larger strategy to enhance regulatory oversight and tackle the ongoing misuse of privileges under the Afghan Transit Trade agreement.
Wider range of goods subject to fee
Under the provisions of the new SRO, the 10% ad valorem processing fee has been extended to cover a considerably broader spectrum of goods being transported to Afghanistan via Pakistani routes.
The revised list now encompasses a comprehensive collection of industrial and commercial items, including machinery like cranes, derricks, and boilers, along with automatic data processing machines, various electrical apparatus, agricultural machinery, and dozens of other products that were not previously subject to this fee structure.
Curbing misuse of transit privileges
This expansion represents a major revision to the earlier SRO 1380(I)/2023, which had initially applied the 10% fee only to five primary categories such as confectioneries, footwear, and certain machinery.
The FBR’s latest action is directly informed by strong recommendations received from the Ministry of Commerce. The Ministry had pointed out that the substantial difference between customs duties in Afghanistan and Pakistan has led to widespread exploitation by traders, negatively impacting Pakistan’s revenue stream and distorting fair trade practices.
Implementing key reforms
In response to the identified misuse, the Ministry of Commerce had proposed two principal reforms: firstly, replacing the current Revolving Insurance Guarantee system with a mandatory 100% bank guarantee based on the goods’ assessed value; and secondly, extending the 10% processing fee to categories of goods that have shown unusual surges in transit volume, indicative of potential evasion strategies. The FBR has acted promptly on these recommendations. The updated list of goods now subject to the fee includes not only high-value equipment but also various electrical components, transmission equipment, cameras, industrial tools, and even electronic waste, aiming to target areas where evasion has been suspected.
The strategic expansion of the transit fee is specifically designed to close existing loopholes within the Afghan Transit Trade framework and promote transparent and fair trade practices.
Through the implementation of these strengthened measures, the FBR reaffirms its dedication to safeguarding Pakistan’s national revenue base while simultaneously fostering lawful and legitimate commerce.
Importers and customs clearing agents involved in Afghan transit trade are strongly advised to remain fully updated on these new FBR regulations to prevent potential penalties or disruptions to their cross-border operations.
