The Federal Government is considering imposing a 10% regulatory duty on petroleum imports from China. In this regard, the Federal Board of Revenue (FBR) has already formulated a policy and sent it to the cabinet for approval.
The move is part of the government’s efforts to prevent oil marketing companies (OMCs) from exploiting an official loophole that has incurred more than Rs. 20 billion losses on the national exchequer.
In January this year, ProPakistani exclusively reported that 15 OMCs had recorded a surge in profit from the tax-free import of petrol from China in the last two years under the China-Pakistan Free Trade Agreement (CPFTA).
Between 1 January 2020 and 1 January 2022, the OMCs had imported over 2.4 billion liters of petrol under the CPFTA and made Rs. 20 billion. They only paid Rs. 1.447 billion in additional customs duty (ACD), which is just 0.25-0.5% of the overall import volume.
Unlike on import of petroleum products from the rest of the world, OMCs are not required to pay the 10% customs duty on imports from China under the CPFTA.
The OMCs had argued that although they made huge gains, they did not break any law by importing tax-free petrol from China. They also held the government responsible for failing to transfer the complete benefit of cheaper duty-free import of petrol from China to the public.
