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FBR abolishes sales tax on Afghan fresh fruit imports

FBR abolishes sales tax on Afghan fresh fruit imports

ISLAMABAD: The Federal Board of Revenue (FBR) has abolished the sales tax on fresh fruit being imported from Afghanistan, except apple, which would be continued to be taxed.

The FBR has issued a circular announcing the Tax Laws (Third Amendment) Ordinance 2021 dated September 24.

The circular says the amendment was made on the recommendation of the Sarhad Chamber of Commerce and Industry.

Businesspersons involved in the Pakistan-Afghanistan trade told that the Pakistan government had always levied custom duties and income tax on the fresh fruit imports from Afghanistan, but it had never collected the sales tax on these items. However, a clerical mistake in a recent amendment to the ordinance resulted in Afghan fresh fruit being slapped with the sales tax.

When traders reported the error to the government, it issued a corrected ordinance, but apple (PCT 0808, 1000) would continue to be taxed.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president Eng Daroo Khan Achakzai told media that apple imports from Afghanistan had a historical context.

Pakistan imposes sales tax on Iranian apple which is imported from the Pakistan-Iran border crossing at Taftan, Achakzai said. Since apple imports from Afghanistan did not face the sales tax, the Iranian apple shipments were routed through Afghanistan, he said.

It affected Pakistani traders who asked the government to intervene and the government imposed sales tax on all fresh fruit imports from Afghanistan, Achakzai says.

The blanket tax orders caused a problem and this was the mistake that the government has corrected, according to traders.

Waheed Ahmed, who heads the All Pakistan Fruit and Vegetable Exporters Importers and Merchants Association, welcomed the government move as a “good decision” that was to benefit traders. He says Afghanistan needed Pakistan’s help and its export should not be taxed.

According to Waheed Ahmed, grapes and pomegranates are imported from Afghanistan while the fruits exported from Pakistan to Afghanistan include kinow, mango, and banana. Additionally, Pakistan imposts dried fruits from Afghanistan to meet the local demand. The two countries also engage in the trade of tomatoes and onions.

The trade volume between Pakistan and Afghanistan has been steadily declining over the past few years, dropping below one billion US dollars in 2020. However, after the political change in Afghanistan, trade between the two countries is expected to increase. The trade of vegetables, fruits, cement, iron bars, and other items between the two countries is conducted overland using trucks.