The government of Pakistan is set to implement the first phase of its ambitious import duty reduction plan under the National Tariff Policy 2025-30 in the upcoming 2025-26 budget. This five-year plan aims to substantially lower import tariffs to encourage export-led growth and revitalize the struggling economy, according to a circular issued by the Engineering Development Board (EDB) on May 17, 2025.
Currently, Pakistan’s import duties are categorized into five tariff slabs: 0%, 3%, 11%, 16%, and 20%. Under the new policy, these will be streamlined to four slabs: 0%, 5%, 10%, and 15%, with the maximum rate capped at 15%, down from the existing 20%. The 3% slab will be eliminated, and tariff lines currently in this bracket will be moved to either 0% or 5%. Additionally, the 11% slab will be reduced to 10%, and the 16% slab to 15%, with the 20% rate to be gradually abolished over the five years.
One of the key reforms is the elimination of the Additional Customs Duty (ACD) within four years and the Regulatory Duty (RD) within five years. Moreover, the Fifth Schedule of the Customs Act—which governs imports of capital goods and industrial raw materials—will be phased out in five years, aiming to simplify and modernize the customs framework.
Prime Minister Shehbaz Sharif, who announced these reforms during a high-level meeting on the National Tariff Policy, hailed this move as a “turning point” for Pakistan’s economic future. He emphasized that these tariff reforms are critical to fostering a smarter, more equitable trade policy that will stimulate economic growth and improve export performance.
The Engineering Development Board has called on stakeholders to carefully review the proposed changes and provide feedback on how these tariff adjustments might impact various industrial sectors, product lines, and the broader economy.
As Pakistan embarks on this path of tariff rationalization, the reforms are expected to attract investment, reduce costs for manufacturers, and ultimately position the country as a more competitive player in the global market.
