Government to Implement Import Duty Reduction Plan

The initial stage of the government’s initiative to decrease import duties, as outlined in the National Tariff Policy 2025-30, is scheduled for implementation in the upcoming budget for 2025-26. The Engineering Development Board (EDB) issued a circular stating that the plan will be fully executed over a five-year period.

The circular, dated May 17, 2025, specified that the government intends to significantly lower import duties in accordance with the National Tariff Policy 2025-30. The initial phase of this reduction will be integrated into the budget for 2025-26, with complete implementation targeted within five years.

The announcement detailed a reduction in tariff slabs from the current five to four over the five-year period. Furthermore, the maximum slab rate will be capped at 15%, reduced from the existing 20% over the same duration.

The document highlighted that, in accordance with the Prime Minister’s directives and a focus on export-oriented growth, the subsequent tariff reforms will form a crucial component of the draft National Tariff Policy 2025-30:

  • Elimination of additional customs duty (ACD) within four years, commencing with this budget.
  • Elimination of regulatory duty (RD) within five years.
  • Phasing out of the 5th Schedule over five years.
  • Establishment of four customs duty slabs (0%, 5%, 10%, and 15%).
  • Setting the maximum customs duty at 15%.

The circular indicated the current existence of five slabs, specifically 0%, 3%, 11%, 16%, and 20%. The decision has been made to eliminate the 3% slab, reallocating tariff lines to either the zero or 5% categories.

The announcement further stated that the 11% slab would be reduced to 10%, and the 16% slab would be lowered to 15% in the budget. The 20% rate slab will be gradually phased out.

The Fifth Schedule of the Customs Act, which pertains to imports of capital goods and industrial raw materials, is slated for abolishment within five years.

The EDB has requested all stakeholders to carefully assess the plan and provide feedback on the anticipated impacts of these changes on various industrial sectors, product lines, economic advancement, and export performance.

Earlier this month, Prime Minister Shehbaz Sharif introduced a new tariff policy aimed at stimulating Pakistan’s economy. This policy includes capping customs duties at 15% and phasing out additional and regulatory duties over the next four to five years.

The announcement occurred during a high-profile meeting concerning the nation’s National Tariff Policy, led by the Prime Minister.

Sharif stated that these reforms signify a pivotal moment and a vital stride towards fostering economic expansion through a more strategic and fair trade policy.