Huge Tax Exemptions on Imports Under FTAs and PTAs for Next Fiscal Year

The cost of the Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with different countries, including China, Sri Lanka, Malaysia, and Indonesia, has been calculated at Rs. 46.10 billion for the next fiscal year due to tax exemptions granted on imports from these nations. The Federal Board of Revenue (FBR) has calculated the revenue amount involved in tax exemptions, which were given under the FTAs and PTAs to various countries for the next fiscal year. The FBR’s projection shows that the government has given Rs. 34.6 billion tax exemptions to China under general exemptions on imports under the Pak-China Free Trade Agreement through SRO 1640(I)/2019, SRO 659(I)/2007 Table-I, SRO 659(I)/2007 Table-II, and 1296(I)/2005 Table-II. This is the highest exemption under an FTA by the Government of Pakistan even though the Chinese share in bilateral trade with Pakistan is bigger than Pakistan. The government has also given a tax exemption worth Rs. 4.03 billion on general exemptions on imports from Indonesia under the Pak-Indonesia PTA through SRO 741(I)/2013. The cost of the Preferential Trade Agreement with Malaysia is projected at Rs. 3.77 billion as the government has granted general tax exemptions on imports from Malaysia for the next fiscal year under PTA through SRO 1261(I)/2007. The government has also granted Rs. 3.36 billion tax exemptions by a general exemption on import from Sri Lanka through Pak-Sri Lanka FTA under four different SROs. The government has also given tax exemptions worth Rs. 287 million on imports from SAARC nations, including India, through the South Asian Free Trade Agreement (SAFTA) under the SRO 1274(I)/2006. The FBR estimated Rs. 34 million tax exemptions on imports from SAARC countries through Free Trade Agreement under the SRO 558(I)/2004.pta