Incidence of taxes up to 60pc of value

SOHAIL SARFARAZ & HAMZA HABIB

ISLAMABAD: The incidence of taxes on imported luxury items or non-essential goods, is up to 60 percent of the value of the goods against 30 percent on other imports.

When contacted, an official of the Federal Board of Revenue (FBR) told Business Recorder that these imported items are subjected to heavy taxation at the import stage including 25 percent sales tax, customs duty, regulatory duties-RDs (5 to 55 percent), withholding tax (1 to 5 percent) and additional customs duty (ACD), ranging between 2 to 7 percent.

The increased taxation includes imported dairy items, processed food, beverages, edible items including confectionery goods, cosmetics, electronics, home appliances, toiletries and other luxury and non-essential items.

The customs duty is charged on the value of imported goods with sales tax levied at the rate of 25 percent of the value of the imported goods imported and on their subsequent supply in the local market or their retail price.

Under the taxation regime, the cumulative impact of duties and taxes on the import of luxury/ non-essential items comes to 50-60 percent as. In case of imported luxury vehicles, the impact of imported duties and taxes is over 300 percent, the official said.

The government is gradually reducing RDs/ADCs on imported goods on an annual basis which may reduce price of some imported items though the 25 percent sales tax, withholding taxes and customs duty would remain intact in the next fiscal year.

In 2024-25, the net collection of Sales Tax (Import) amounted to Rs 2,281.9 billion, up from Rs. 1,863.9 billion from the previous financial year (2023-24), showing a growth of 22.4 percent.

In the aftermath of the Middle East conflict Secretary General of the Retailers Grocers Group, Fareed Qureshi, stated that so far prices of imported items are stable as economic activity has yet to pick up subsequent to Ramzan and Eid. He added that once suppliers begin to incur the rise in transportation costs prices of locally produced goods are likely to go up by 10 percent and imported by over 20 percent.

Shopkeepers in retail outlets said that the price of imported cosmetic items is likely to go up by 10-40 percent depending on the product adding that the price of locally manufactured cosmetics is also expected to rise by 10-15 percent because much of their raw material is imported from China and the Middle East.

A survey carried out by Business Recorder revealed that the price of diapers and imported soaps has already risen by 10 to 16 percent. “Chinese pack of diapers which cost us around PKR 800 per pack are now available at PKR 900,” a wholesaler stated.