ISLAMABAD: The federal government has significantly reduced regulatory duties (RDs) on a wide range of imported goods, including food products, vehicles, and personal care items, effective from July 1, 2025.
This move is expected to make over 1,000 imported items more affordable, primarily benefiting international food franchises and vehicle importers, and is part of a broader strategy to rationalize tariffs.
The Federal Board of Revenue (FBR) issued a notification detailing the lower regulatory duties on hundreds of imported goods that fall under the customs duty slabs of 0%, 5%, and 10%. While duties on items deemed harmful to local manufacturing remain unchanged, the reductions cover a diverse array of products, from pet food and cheese to cosmetics.
Strategic Tariff Rationalization and IMF/World Bank Alignment
In addition to RDs, the government has also slashed additional customs duties (ACDs), which were previously used to generate supplementary revenue. This decision aligns with a broader tariff rationalization strategy supported by the International Monetary Fund (IMF) and the World Bank, with plans to gradually eliminate these duties over the next four to five years. This particular aspect of the policy is anticipated to significantly benefit international food chains and their local consumers by making imported ingredients and products more cost-effective.
Notable Reductions Across Sectors
The most substantial reduction in regulatory duty was applied to imported SUVs, with duties slashed by 44%, bringing them down to 50%. Other items, including sunglasses and wristwatches, also saw notable duty reductions.
Specific changes include:
Vehicles: A one-third cut in duties on new cars and mini-vans, now taxed at 10%.
Poultry & Fish: A new federal excise duty of Rs10 per chicken has been imposed, while the import duty on live poultry and fresh fish has been halved to 5%.
Food Items: A 10% cut in duties on cheese and curd imports, a 5% reduction on edible insect and animal-based products, and lowered duties on various items like dates, figs, and avocados. The duty on sugar confectionery, however, remains unchanged at 40% to protect local producers.
Personal Care & Others: A 20% cut in the duty on imitation jewelry and a reduction in the regulatory duty on mobile phone SIM cards from 15% to 12%.
Furthermore, the government also implemented cuts to additional customs duties: items in the 15% tariff slab saw a 2% reduction, those under 20% experienced a 4% cut, and items in higher tariff brackets saw reductions of up to 6%.
This comprehensive tariff adjustment follows initial plans to cut or abolish duties on 1,984 tariff lines, originally aimed at reducing protection for local industries. However, after resistance from the business community, the plan was revised, leading to the exclusion of several finished goods from the cuts. The current set of reductions reflects a balanced approach to facilitating imports while considering local industrial interests.
