Page 28 - CMA Journal (Sep-Oct 2025)

Focus Section

Exiting the Tariff Maze: How the

National Tariff Policy 2025-2030

can Improve Pakistan's Economy

The National Tariff Policy (NTP) 2025-2030, published at The NTP ensures lower
the start of the current fiscal year, sets an agenda for tariff production costs by
policymakers to reduce customs duties, regulatory reducing the cost of
duties, and additional customs duties that are procuring imports
burdensome for businesses and consumers across and leveling the Aadil Nakhoda
Pakistan. The NTP not only eliminates several import playing field between Faculty Member at Institute of
duties but also reduces the number of customs duty smaller and larger Business Administration (IBA)
slabs. The slabs were previously divided based on businesses, as the and Chairman of the Economic
former benefit from
arbitrary numbers, such as 3%, 11%, and 16%, which Advisory Group (EAG)
a more predictable
caused confusion and increased complexity for importers
tariff structure. With the NTP guiding tariff policy, the
navigating the tariff system. However, this has been
issuance of Statutory Regulatory Orders (SROs), which
reduced to more rational divisions involving multiples of
create uncertainty in the tariff structure, will likely
five, with the highest slab capped at 15%.
become redundant. Furthermore, the NTP will enhance
Pakistan has one of the highest tariff rates in the world. export potential by improving the competitiveness of
The overall most-favored-nation tariff rate, combined import-dependent manufacturers and attracting
investments through a more business-friendly and
with additional customs and regulatory duties, exceeds
predictable tariff environment.
18%, the highest in South Asia. Approximately 40% of
tariff lines in Pakistan face duties of more than 15%, The Economic Advisory Group (EAG), a policy advocacy
group in Pakistan, has undertaken an extensive analysis
compared with 30% for India and Sri Lanka. It is much
of the structure of customs and regulatory duties
lower for East Asian economies. The goal of the NTP is to
imposed by Pakistan. It has found multiple layers of
reduce the number of duty slabs to four while phasing
duties applied to several products to protect domestic
out extra duties. Although this is expected to reduce
industries from foreign competition and generate fiscal
federal fiscal revenue, the reduction in tariffs is likely to
revenue for the government.
improve national welfare by encouraging efficiency and
innovation in the economy. There is evidence of high and variable protection across
different sectors, some of which are strategically important
Consider a small business owner who has to navigate a to the export strategy, such as the textile industry. However,
labyrinth of different customs duties, which increases not these duties also increase the complexities involved in
only the cost of doing business but also the time and international trading activities, reducing businesses’ ability
effort involved. Navigating the ‘tariff maze’ creates to participate in global trade. This creates an uneven
significant challenges for businesses that already face playing field within the sector, as certain products receive
greater protection than others. Further, the lack of
several other measures and bureaucratic hurdles that
transparency throughout the process, from the
inhibit growth. With the reduction in tariffs, a major
burden on businesses will be eliminated as they face a introduction of tariff duties to their implementation, leads
more predictable trading environment regarding tariffs. to uncertainty in business decisions and reduces the ability
to make informed choices.
26 ICMA’s Chartered Management Accountant, Sep-Oct 2025