The government is examining a proposal to increase the rate of additional customs duty from 2 to 3 percent on imports across the board to generate revenue to the tune of Rs 25-28 billion during 2018-19. Among other taxation measures under consideration, sources said that the Federal Board of Revenue (FBR) is examining a proposal to raise additional customs duty from 2 to 3 percent on imports having impact on 7200 customs tariff lines. The raise in import duty subsequently results in increase in sales tax and withholding tax at import stage.

If the measure is finalized for amendments in the Finance Act, 2018, it would have revenue impact of Rs 25-28 billion. In budget (2018-19), the FBR has increased additional customs duty from 1 to 2 percent on imports and reviewed regulatory duties on 731 customs tariff lines. The regulatory duties were increased on 100 tariff lines.

On October 16, 2018, the FBR had imposed regulatory duties on the import of 570 goods including vehicles, SIM cards (5 percent RD), wheat (60 percent RD), cotton yarn (5 percent), betel leaves (Rs 400/kg) and wide range of imported food items and dairy products. The RDs on the import of these 570 items would remain applicable till June 30, 2019. RDs were imposed within the range of 5 percent to 90 percent. The 10 percent, 20 percent and 40 percent RD were imposed on different items.

A tax expert said that the question arises whether the FBR is in a position to again raise taxes on sectors which were affected by the supplementary budget including salaried class, tobacco sector, vehicles (1800cc and above) and additional customs duty/regulatory duties on imports.

Copyright Business Recorder, 2018