Pakistan’s industrial sector has raised serious concerns over the Export Processing Zone (EPZ) duty system, highlighting that the current mechanism is causing double taxation and increasing the cost of manufacturing. A delegation from National Steel Complex Limited recently met Federal Minister for Commerce Jam Kamal Khan to discuss these pressing issues.
During the meeting, the delegation explained that industries importing raw materials into the tariff area are required to pay customs duties at the initial stage. However, when these materials are processed or undergo value addition within EPZs and re-enter the tariff area, duties are imposed again on the finished products.
This system effectively results in double taxation, placing a heavy financial burden on manufacturers, particularly those involved in value-added industrial activities such as fabrication, coating, machining, and engineering processes. The delegation stressed that this policy discourages industrial growth and reduces competitiveness in both local and international markets.
To address the issue, industry representatives proposed that duties should only be applied to the additional value created within EPZs rather than the total value of the finished goods. This adjustment, they argued, would support value-added manufacturing and reduce unnecessary financial strain.
The delegation also highlighted technical challenges related to customs valuation and product classification. These complications often create uncertainty in determining the exact value addition, further complicating the taxation process.
In addition, concerns were raised about the broader challenges facing long-term industrial projects. Rising energy costs, inconsistent tariff structures, and shifting economic conditions are making it increasingly difficult for industries to sustain operations and plan future investments.
The discussion also touched on the role of the National Tariff Commission, which provides technical and advisory support on tariff policies and trade protection measures. However, industry stakeholders emphasized the need for policy reforms to create a more business-friendly environment.
Overall, the meeting underscored the urgent need to review the EPZ duty framework to eliminate double taxation and support Pakistan’s industrial and economic growth.
