Pakistan’s Import-Export Sector: Taxes and Their Real-World Impact
Pakistan’s export-import industry is among the pillars of its economy — driving enterprise, providing employment for millions, and delivering to consumers and firms essential products. Ranging from surgical equipment and apparel to food and machinery, international trade is the very lifeblood of most firms.
But just as with all other industries, the import-export world isn’t solely characterized by global demand or supply chains. It’s being rewritten by tax policies — far too often vague, confusing, and increasingly restrictive.
📦 A Sector with Global Reach and Local Value
Pakistan is a conventional exporter of textiles, leather products, rice, and sporting goods, among others. Pakistan is, however, heavily dependent on energy, machinery, electronics, and raw materials required to sustain local industries imported into the country.
Pakistan’s exports in FY2023 amounted to around $30 billion, while its imports were over $50 billion — indicators of its trade potential and reliance. To offset trade and generate revenue, governments tax both sides of the ledger. But in recent years, those taxes have been a thorn in the side of traders.
Taxes That Traders Encounter (as of 2025)
- Whether exporting apparel or importing machinery, this is what many businesses are experiencing:
- Customs Dues: Between 5% and over 30%, these are charges on the majority of foreign imports and are a significant source of revenue. Unfortunately, they also add to the increased cost of raw materials and equipment, to the detriment of local production.
- Regulatory Duty (RD): Imposed in addition to customs duties on “luxury” or non-essential imports — but typically ends up being imposed on essential industrial goods as well.
- The impact of tax policies on importers goes far beyond the paperwork. It’s a matter of survival for many businesses. And that’s because tax policies are no longer just an administrative headache-they’re a make-or-break issue.
- That reality is playing out in three key ways.
- Rising costs and shrinking margins are the first. Manufacturers who rely on imported raw materials are now paying more to produce because of those accumulated duties and taxes. That makes locally produced goods less competitive—both at home and abroad.
- The second effect is deterring small traders. Those high port entry charges are almost impossible for small and medium-sized importers to manage. Many of them are pushed towards the grey or black economy just to survive. They don’t register at all, because they can’t afford to.
- Exporters are the third casualty. Those months (or years) it takes to get refunds and rebates mean they operate on tight margins. Without timely payment, they can’t reinvest, grow or fill big orders. That’s a cash-flow crisis.
Policy Instability
Standard customs rate, regulatory tax, and sales tax applicability adjustments introduce uncertainty. Companies cannot plan, price correctly, or negotiate long-term agreements with certainty.
What Must Be Altered?
If Pakistan wants to encourage trade, taxation policies must be altered from being revenue-driven to growth-driven.
This is what the industry urgently needs:
- Simplified taxation and duty structure with fewer duplicate levies
- Speed up exporters’ and importers’ refund processing.
- Reduce advance taxes for compliant, registered traders
- Real-time electronic tax filing and clearance portals
- Clear rules with reduced mid-year adjustment
✅ What Traders Can Do Immediately
Even though policy reform takes time, business owners can protect their business by:
- Registration on WEBOC (Web-Based One Customs) and FBR portal access
- Maintenance of accurate import/export records for credits and rebates
- Communicating with tax consultants and customs brokers to stay compliant
Examining Free Trade Agreements (FTAs) and preferential duty schemes With the export promotion schemes offered by TDAP and FBR
Last Words Pakistan’s trade potential is huge — but if we continue to tax imports and exports into oblivion, we will not only lose the revenue, we will lose competitiveness, investor confidence, and the confidence of the very firms that are attempting to expand the economy. The import-export business does not need more red tape. It needs clarity, consistency, and a tax system that will stimulate growth — not stifle it. It’s now time to turn attention from tax burden to trade facilitation.