Pakistan to impose sales tax, customs duty on cotton imports

The Pakistan government plans to reinstate the tariff after a gap of nearly seven months in response to recent large purchases from overseas. It will impose a four percent customs duty and five percent sales tax on cotton import by the middle of July, a statement said on Tuesday.

On a proposal by the Finance Division, the ECC (The Economic Coordination Committee) of the Cabinet)) approved the restoration of import duty and sales tax on import of cotton with effect from 15th July 2017, the government statement said.

The ECC meeting was chaired by finance minister Ishaq Dar. The decision has been made to boost the confidence of domestic cotton growers during the upcoming sowing season.

A decline in cotton production last season forced the government to withdraw import duty and sales tax. The finance ministry had estimated revenue loss of around Rs10 billion following withdrawal of duty and sale tax.

Pakistan’s cotton consumption is pegged around 15 million bales, while it had produced around 10.5 million bales. The country was the third largest raw cotton exporter, but it has been an importer for the last two years. Last year, Pakistan imported around 2.7m bales from India.