The News (16/04/2020) – ISLAMABAD: The Ministry of Commerce has tabled major proposals for rationalisation of customs tariff including elimination of fifth schedule of Customs Act, introduction of zero slab and removing additional customs duty and regulatory duties in phased manner starting from next budget for 2020-21.

Instead of concessionary regime, the government plans to come up rationalisation of tariff especially bringing raw material and inter-mediatory goods into lowest slabs. If the zero slab is introduced then all such items would be placed into zero slab. Without changing existing customs tariff slabs in the next budget, the exercise of tariff rationalisation for 26 sectors has been underway with assigning responsibility to FBR to come with exact estimates of revenue losses next week.

The cost of exemptions on account of customs in shape of fifth schedule, major identified statutory regulatory orders (SROs), free trade agreements (FTAs) and Preferential Trade Agreements (PTAs), Export Promotion Schemes and Chapter 99 of Customs Act has been estimated revenue losses of over Rs300 billion on per annum basis.

In order to firm up uniform policy on tariff rationalisation for FY 2020-21, the Ministry of Commerce and FBR kick-started deliberations to finalise roadmap for implementing tariff policy in phased manner devised by National Tariff Commission (NTC) in consultation with business giants. The major proposal of rationalisation of tariff included simplification into tariff system, introduction of zero slabs, reduce concessionary SROs and elimination of 5th schedule.

There is also proposal to remove additional customs duty and regulatory duties in the next budget. It might not be possible but the direction will be set for next three years period.

When contacted to Advisor to Prime Minister on Commerce Abdul Razak Dawood on Wednesday, he said that the government decided to finalise tariff rationalisation well before the budget instead of taking such important decisions in haste. He said that he started deliberations with the FBR and held maiden session this week to deliberate upon course of action for implementing tariff rationalisation in phased manner.

He said that they had briefed the FBR regarding the vision of our ministry and now decided that they would come up with revenue cost attached to the rationalisation of tariff. “The FBR will come up with its exact assessment regarding revenue impact with rationalisation of tariff” he added. To another query, he said that they would also recommend for removal of both tariff and non-tariff barriers with the purpose to bring simplification into the system. He said that he wanted to assure the business community that the government would ensure provision of duty drawback in transparent and smooth manner so that the businesses could overcome liquidity crunch.