The Public Accounts Committee (PAC) has taken strong notice of the Federal Board of Revenue’s (FBR) recent decision to waive taxes on the import of sugar and summoned the FBR Chairman and Commerce Secretary to the next meeting.
The issue was raised during a PAC session where members questioned the rationale behind SRO 1217(I)/2025, under which the FBR reduced the sales tax on the import of 500,000 metric tons of white crystalline sugar from 18 percent to 0.25 percent. That’s roughly a 99 percent tax waiver.
The 3 percent value-added tax (VAT) was also exempted. The waiver applies to imports by both the Trading Corporation of Pakistan (TCP) and the private sector.
PAC members termed the decision a long-standing practice that favors a few groups while increasing the burden on the general public. They argued that such exemptions in the past have led to artificial price hikes in sugar, harming consumers and benefiting powerful lobbies.
The committee noted that the exemption continues a trend where financial relief is extended to influential groups under the pretext of public interest. Members called for firm action, warning that such practices undermine public trust and distort market fairness.
During the meeting, Committee Member Javed Hanif stated that the IMF had not objected to the sugar-related tax relief. Finance Secretary confirmed that tax exemptions on sugar were not part of any performance benchmarks under the IMF agreement and said discussions with the IMF on the matter were ongoing.
Hanif questioned the government’s contradictory tax decisions, pointing out that taxes were imposed on poultry and mutual funds, while sugar was exempted. FBR Chairman clarified that the FBR did not impose such taxes and that those were government decisions.
The committee expressed concern over the FBR’s move to waive taxes on sugar imports. The FBR Chairman stated that sugar imports are subject to up to 54 percent tax, making imported sugar costly. He added that the exemption was granted based on a federal cabinet decision.
Chairman Naveed Qamar criticized the government’s continued involvement in the sugar sector, suggesting that the import and export of sugar should be left to the private sector. He noted that prices of other commodities are being deregulated while sugar remains heavily controlled, despite sufficient domestic reserves.
PAC directed that the FBR Chairman and Commerce Secretary appear in the next session to justify the decision. The notification, dated July 8, 2025, was issued under government case No. 432/Rule-19/2025/615 and sets a deadline of September 30, 2025, for availing the exemption. It also requires the Commerce Division to manage sugar imports and ensure quality through international inspection firms.