How to Save Money on FBR Custom Tariff: A Complete Guide

FBR custom tariff is the tax imposed by the Federal Board of Revenue (FBR) of Pakistan on the import and export of goods and services. It is based on the Harmonized System (HS) of tariff classification, which is an international standard for categorizing products. The FBR custom tariff is updated every year and can be accessed online through the FBR website.

If you are a business owner or a consumer who deals with imported or exported goods, you might be wondering how to save money on FBR custom tariff. In this article, we will share some tips and tricks that can help you reduce your tax burden and increase your profit margin.

Tip 1: Know your HS code

The first step to saving money on FBR custom tariff is to know your HS code. This is a six-digit code that identifies the product category, subcategory, and specific item. For example, the HS code for fresh apples is 0808.10, where 08 is the chapter for edible fruits and nuts, 08 is the heading for apples, and 10 is the subheading for fresh apples.

Knowing your HS code will help you find out the applicable FBR custom tariff rate for your product. You can use the FBR online tariff finder tool to search for your HS code and see the corresponding duty rate, sales tax rate, additional sales tax rate, regulatory duty rate, and other charges. You can also download the complete FBR custom tariff book from the FBR website.

Tip 2: Apply for concessions and exemptions

The second step to saving money on FBR custom tariff is to apply for concessions and exemptions. There are various schemes and policies that offer reduced or zero duty rates for certain products or sectors. For example, there are concessions for raw materials, machinery, equipment, and spare parts used in various industries such as textile, leather, engineering, pharmaceuticals, etc. There are also exemptions for charitable goods, diplomatic goods, personal baggage, gifts, samples, etc.

To avail these concessions and exemptions, you need to fulfill certain criteria and submit the required documents to the customs authorities. You can check the eligibility and procedure for each scheme or policy on the FBR website or consult a customs agent or a tax consultant for guidance.

Tip 3: Opt for preferential trade agreements

The third step to saving money on FBR custom tariff is to opt for preferential trade agreements. These are agreements between Pakistan and other countries or regions that grant preferential treatment to each other’s products in terms of duty rates and market access. For example, Pakistan has preferential trade agreements with China, Malaysia, Sri Lanka, Iran, Mauritius, etc.

To benefit from these agreements, you need to ensure that your product meets the rules of origin criteria and obtain a certificate of origin from the relevant authority. You can check the list of preferential trade agreements and their details on the Ministry of Commerce website or contact the trade representative of the partner country or region.

Tip 4: Choose the best mode of transportation

The fourth step to saving money on FBR custom tariff is to choose the best mode of transportation for your product. The mode of transportation can affect the cost and time of delivery as well as the customs clearance process. There are four main modes of transportation: air, sea, land, and rail.

Air transportation is the fastest but also the most expensive mode of transportation. It is suitable for perishable, urgent, or high-value products. Sea transportation is the cheapest but also the slowest mode of transportation. It is suitable for bulky, heavy, or low-value products. Land transportation is a convenient mode of transportation for neighboring countries or regions. It is suitable for small or medium-sized products that require frequent delivery. Rail transportation is a reliable and economical mode of transportation for long distances. It is suitable for large or heavy products that do not require urgent delivery.

You should compare the advantages and disadvantages of each mode of transportation and choose the one that best suits your product type, quantity, quality, destination, budget, and deadline.

Tip 5: Hire a professional customs broker

The fifth step to saving money on FBR custom tariff is to hire a professional customs broker. A customs broker is a person or a company that handles the customs clearance process on behalf of the importer or exporter. They have the expertise and experience in dealing with customs regulations, procedures, documentation, valuation, classification, duty calculation, payment, etc.

Hiring a professional customs broker can save you time and money by avoiding delays, errors, penalties, fines, confiscation, etc. They can also advise you on how to optimize your import or export operations and comply with all legal requirements. You can find a list of licensed customs brokers on the FBR website or ask for recommendations from your peers or industry associations.

FBR custom tariff is an important factor that affects your import or export business in Pakistan. By following these five tips, you can save money on FBR custom tariff and improve your profitability and competitiveness. Remember to always check the latest FBR custom tariff rates and rules before importing or exporting any product and consult a professional if you have any doubts or queries.

How FBR Custom Tariff Affects the Global Demand for Pakistani Imports and Exports

The Federal Board of Revenue (FBR) is the tax authority of Pakistan that regulates the customs tariff on the import and export of goods. The customs tariff is a schedule of rates or charges imposed by the government on the movement of goods across the national borders. The customs tariff serves as a source of revenue for the government, as well as a tool for protecting the domestic industries and promoting the trade policy objectives.

In this blog post, we will analyze how the FBR custom tariff affects the global demand for Pakistani imports and exports, based on the latest changes in the tariff rates and slabs announced by the FBR in July 2021.

FBR Imposes Duties on Import of Over 80 Luxury and Non-Essential Items

One of the major changes in the FBR custom tariff is the imposition of additional customs duty (ACD) on the import of over 80 luxury and non-essential items, such as cosmetics, perfumes, chocolates, cheese, fruits, nuts, juices, mineral water, ice cream, coffee, tea, spices, sauces, soups, pasta, noodles, biscuits, cakes, pastries, confectionery, chocolates, chewing gum, etc.

According to SRO.845 (I)/2021 issued by the FBR on June 30, 2021 , the FBR will charge 2 percent ACD on the import of items falling under the customs tariff slabs of zero percent, 3 percent and 11 percent. In case of zero-percent customs tariff slab, 2 percent ACD would be applicable only on the import of an item covered under the PCT code 72.04.

The FBR will also collect 4 percent ACD on the import of items falling under the customs tariff slab of 16 percent. The ACD at the rate of 6 percent would be collected on the import of goods covered under the customs tariff slab of 20 percent.

The FBR has also reduced ACD on goods falling under 2436 tariff lines pertaining to 20% customs duty slab from 7% to 6%.

The main objective of this measure is to discourage the import of luxury and non-essential items that have a negative impact on the balance of payments and foreign exchange reserves of Pakistan. The FBR expects to generate an additional revenue of Rs. 40 billion from this measure in fiscal year 2021-22.

The impact of this measure on the global demand for Pakistani imports is likely to be negative, as it will increase the cost of importing these items and reduce their competitiveness in the international market. The consumers in Pakistan may also face higher prices and lower quality of these items due to reduced supply and increased smuggling.

However, this measure may also have some positive effects on the domestic production and consumption of these items, as it will create an incentive for local manufacturers and farmers to produce more and better quality products that can substitute for imported ones. This may also create more employment opportunities and income for the local population.

FBR Reduces Duties on Import of Raw Materials and Machinery for Export-Oriented Industries

Another significant change in the FBR custom tariff is the reduction of duties on the import of raw materials and machinery for export-oriented industries, such as textile, leather, surgical instruments, sports goods, carpets, etc.

According to SRO.846 (I)/2021 issued by the FBR on June 30, 2021 , the FBR has reduced or exempted customs duty on 164 raw materials used by these industries. The FBR has also reduced or exempted regulatory duty (RD) on 152 raw materials used by these industries.

Similarly, according to SRO.847 (I)/2021 issued by the FBR on June 30, 2021 , the FBR has reduced or exempted customs duty on 48 machinery items used by these industries. The FBR has also reduced or exempted RD on 35 machinery items used by these industries.

The main objective of this measure is to encourage the import of raw materials and machinery that are essential for enhancing the productivity and quality of export-oriented industries in Pakistan. The FBR expects to forego a revenue of Rs. 18 billion from this measure in fiscal year 2021-22.

The impact of this measure on the global demand for Pakistani exports is likely to be positive, as it will lower
the cost of production and increase the competitiveness of these exports in the international market. The exporters in Pakistan may also benefit from higher profits and market share due to improved quality and efficiency of their products.

However, this measure may also have some negative effects on the domestic industries that produce similar raw materials and machinery, as they may face lower demand and prices due to increased competition from imported ones. This may also affect their profitability and sustainability in the long run.

FBR Increases Duties on Import of Components for Car Manufacturing

A third notable change in the FBR custom tariff is the increase of duties on the import of components for the assembly/ manufacture of new motorcars including station wagons and racing cars.

According to SRO.848 (I)/2021 issued by the FBR on June 30, 2021 , the FBR will charge 15 percent customs duty on the import of these components, which were previously exempted from customs duty.

The main objective of this measure is to protect the local car manufacturing industry from the influx of cheap and substandard imported components that may affect the quality and safety of the cars produced in Pakistan. The FBR expects to generate an additional revenue of Rs. 6 billion from this measure in fiscal year 2021-22.

The impact of this measure on the global demand for Pakistani imports and exports is likely to be mixed, as it will have different effects on different segments of the car market.

On one hand, this measure may reduce the demand for imported components that are used for assembling or manufacturing new cars in Pakistan, as it will increase their cost and reduce their attractiveness for the local car makers. This may also reduce the supply and variety of new cars available in the domestic market, as well as increase their prices for the consumers.

On the other hand, this measure may increase the demand for imported cars that are already assembled or manufactured abroad, as they may become more competitive and affordable compared to the locally produced ones. This may also increase the demand for exported cars that are assembled or manufactured in Pakistan using locally sourced components, as they may become more attractive and profitable for the foreign buyers.

However, this measure may also have some positive effects on the local car manufacturing industry, as it will create an incentive for them to invest more in research and development, innovation and quality improvement of their products. This may also enhance their reputation and credibility in the domestic and international market.

In conclusion, we have seen how the FBR custom tariff affects the global demand for Pakistani imports and exports, based on the latest changes in the tariff rates and slabs announced by the FBR in July 2021. We have discussed three major changes: the imposition of duties on import of over 80 luxury and non-essential items, the reduction of duties on import of raw materials and machinery for export-oriented industries, and the increase of duties on import of components for car manufacturing. We have analyzed how these changes have different impacts on different sectors and segments of the economy, as well as on different stakeholders such as consumers, producers, exporters, importers, government and society.

We hope that this blog post has provided you with some useful insights and information about the FBR custom tariff and its implications for Pakistan’s trade performance and prospects. If you have any questions or comments, please feel free to share them with us.

References:

https://core.ac.uk/download/pdf/6958854.pdf

https://propakistani.pk/2021/07/01/fbr-imposes-duties-on-import-of-over-80-luxury-and-non-essential-items/
https://www.fbr.gov.pk/download/sro-846i2021/156978
https://www.fbr.gov.pk/download/sro-847i2021/156979
https://www.brecorder.com/news/40219326

https://www.fbr.gov.pk/

https://www.fbr.gov.pk/tariff-finder/132533

https://www.fbr.gov.pk/downloadcustoms/132534

http://www.commerce.gov.pk/?page_id=110