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The Federal Board of Revenue (FBR) has introduced a significant relief package to facilitate the import of 500,000 metric tons of white crystalline sugar, aiming to address supply shortages and stabilize domestic sugar prices.
According to a set of statutory regulatory orders (SROs) issued on Wednesday, July 9, 2025, the FBR has:
- Exempted customs duty
- Reduced the sales tax from 18% to 0.25%
- Lowered the withholding tax to 0.25%
- Exempted 3% minimum value-added tax (VAT)
These measures apply specifically to imports made by the Trading Corporation of Pakistan (TCP) or approved private sector entities.
Three SROs Outline Comprehensive Tax Exemptions
The relief package is documented in three separate SROs:
- SRO.1215(I)/2025: Customs duty exemption
- SRO.1216(I)/2025: Amendment to income tax on imports
- SRO.1217(I)/2025: Sales tax and VAT relief
Under SRO.1215(I)/2025, sugar falling under the specified Pakistan Customs Tariff (PCT) codes is fully exempt from customs duties during the permitted import window.
Sales Tax Slashed to 0.25%, VAT Exempted
As per SRO.1217(I)/2025, the sales tax rate on the import and subsequent supply of white crystalline sugar has been slashed from 18% to just 0.25%. In addition, the sugar is exempt from the 3% minimum value-added tax, previously mandated under the Twelfth Schedule of the Sales Tax Act, 1990.
This drastic reduction is expected to make sugar imports significantly cheaper, with the benefit likely to be passed on to consumers.
0.25% Withholding Tax Under Section 148
According to SRO.1216(I)/2025, the FBR has amended the Second Schedule of the Income Tax Ordinance, enabling a 0.25% withholding tax on sugar imports made under Section 148 of the Ordinance. The low tax rate will apply to sugar imports up to a total of 500,000 metric tons, aligning with the government’s price stabilization plan.
However, this concession is subject to specific conditions:
- Import must be carried out by the Commerce Division through the Trading Corporation of Pakistan (TCP) or authorized private importers.
- Quality assurance must be ensured via an international inspection firm.
- Cut-off date for availing the tax relief is September 30, 2025.
- Imports must adhere to government quotas and specified conditions for both immediate and future requirements.
Government Targets Market Stability and Affordability
The decision to provide sweeping exemptions and tax cuts comes amid concerns over inflated sugar prices and potential supply constraints during the upcoming months. By easing the financial burden on importers, the government hopes to flood the market with competitively priced sugar, thereby reducing retail prices and easing inflationary pressures on households.
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Conditions to Ensure Quality and Transparency
To avoid misuse and ensure quality and transparency, the Commerce Division has been tasked with closely monitoring imports, enforcing quality control standards, and ensuring that both TCP and private sector importers comply with the terms and quota allocations set forth in the Cabinet’s decision.
The FBR emphasized that these measures are strictly time-bound and will only apply to sugar imported on or before September 30, 2025.
Conclusion: Strategic Relief for Economic Stability
With this tax relief package, the government aims to intervene strategically in the market without triggering fiscal instability. By allowing cost-effective imports and regulating supply through public-private channels, the FBR hopes to combat hoarding, reduce consumer costs, and ensure food security in the short term.
This move reflects broader efforts by the Ministry of Finance and Ministry of Commerce to strike a balance between revenue generation and economic relief as part of Pakistan’s ongoing fiscal management strategy.
