The Federal Board of Revenue (FBR) has stated in its latest Tax Expenditure Report 2025 that the Regulatory Duties (RD) and Additional Customs Duties (ACD) imposed through various Statutory Regulatory Orders (SROs) were essentially temporary measures introduced to curb rising imports and address the country’s worsening current account balance, and while these duties were designed as time-bound interventions their exemptions and concessions are still treated as deviations from benchmark rates for the purposes of the tax expenditure analysis, meaning any relief or preferential treatment granted under these duties is counted as revenue foregone. According to the report, these temporary duties and their related concessions led to a significant Rs161 billion revenue loss in fiscal year 2023-24, highlighting the cost of using regulatory tools to manage imports and protect the balance of payments. The FBR noted that the statutory rates for Customs Duty (CD), Regulatory Duty (RD) and Additional Customs Duty (ACD) have been established as benchmark rates for this analysis and that customs-related exemptions and concessions are typically subject-specific, varying based on the nature of goods or services involved. In calculating Customs Expenditure for the report, the period under consideration was the entire fiscal year 2023-24 in order to assess how these duties, exemptions and concessions affected government revenue and outlays during that period. The disclosure offers one of the clearest indications yet that regulatory and additional duties were never intended to be permanent and may signal a future phasing out of some of the additional tariffs as the external sector stabilizes, but it also underscores the delicate balance policymakers must strike between protecting revenue streams and supporting economic activity, since these duties can offer immediate relief to the current account deficit but also raise import costs for businesses and consumers and lead to measurable losses in revenue. Economists and trade experts argue that a more transparent and predictable customs policy with clear timelines for phasing in or phasing out such duties could help businesses plan better and reduce the perception of ad hoc changes in import tariffs, making the FBR’s Tax Expenditure Report 2025 a key document for understanding the impact of Pakistan’s temporary trade measures on both government finances and the broader economy.
