Custom Duties

Tahir, S. H., Ali, Y., Ismail, A. &Hanan, A. (2014) Impact of Direct and Indirect Tax Incentives on Textile Industry (Pakistan).

The authors aim to address the problem of tax incentives in Pakistan by exploring their impact on textile industry. They have used secondary data from financial reports (2005 to 2010) of companies regarding textile sector and Economic Survey of Pakistan issued by FBR. The authors conclude that excise duty has positive impact while custom duty has no impact on the growth of the textile sector. Direct taxes have a negative impact on the profit of textile sector. The authors highlight the importance of the textile sector referring to its contribution in the exports of Pakistan and the hurdles being faced by the sector including direct and indirect taxation at 40% and 17%, respectively. The study recommends working towards reducing the tax collection gap necessary to increase tax to GDP ratio. It also recommends charging indirect taxes according to the nature of the good, careful analysis should be done before forming a taxation policy.

Collecting Customs…with “exemptions”. (2013). Federal Bureau of Revenue & International Growth Centre.
In this brief authors discuss the exemptions placed on custom duties. In Pakistan, the customs duty is usually imposed on import and sometimes on export of goods. Custom duty involves examination and assessment of the goods in question, determining the duty and whether exemptions or reductions are allowed. The authors highlight the need to identify the costs being undertaken by Pakistan to provide provisions, to other countries, on goods they are importing. Despite the existence of a website weBoc, the system allows for the existence of discrepancies. The report suggests that thousands of SROs have been issued over the years and it is often difficult to determine their need. The paper suggests that the function of levying taxation rests with the parliament and not the FBR. Trade with China is hit by the SROs – to Pakistan’s cost. The paper highlights that twenty major revenue contributors of withholding tax pay significantly more withholding tax than duty on imports – 48 percent from imports as compared to 84 percent overall in withholding tax. That suggests an unfair burden of withholding tax on a few and exemptions for the rest. It is clear that special interest groups use lobbying to exempt themselves from it at the import stage.