ISLAMABAD: The Federal Board of Revenue (FBR) informed a National Assembly panel on Tuesday that the International Monetary Fund (IMF) has approved 47 percent exemptions in taxes and duties on sugar imports by the Trading Corporation of Pakistan (TCP).
While briefing the committee, FBR Member Dr Hamid Ateeq Sarwar stated that sugar imports are typically subject to 47.5 percent taxes—comprising 20 percent customs duty, 18 percent General Sales Tax (GST), 3 percent value-added tax, and 6.5 percent income tax.
However, after IMF approval, the government has now exempted state-owned sugar imports from these duties, with only a 5 percent tax remaining applicable. Sarwar confirmed that the IMF had endorsed the government’s decision to waive these levies for public sector imports.
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Dr. Sarwar emphasized that since Pakistan had not imported sugar since 2021, these taxes were not being collected in practice. The new exemption applies specifically to government imports, while private sector sugar imports remain fully taxable.
Additional Secretary at the Ministry of Industries and Production, Asif Saeed Khan Lughmani, told the panel that the decision to export sugar was made by the Federal Cabinet, following recommendations from the Sugar Advisory Board (SAB). The SAB includes representation from various ministries, provincial cane commissioners, FBR, the Pakistan Sugar Mills Association (PSMA), and sugarcane growers.
He added that the export decision was data-driven, and based on insights from the FBR’s Track and Trace System. The system accounted for a buffer stock of 540,000 metric tons—equal to one month’s domestic consumption—before recommending the export of surplus sugar.
Dr. Sarwar clarified that the government exported 750,000 metric tons of sugar and planned to import only 250,000 metric tons, which he described as a cost-neutral strategy. He noted that lower-than-expected sucrose content in sugarcane (6.5–8 percent compared to an estimated 10 percent) was the key reason for the tight production levels.
He assured the panel that the Track and Trace System is functioning reliably. Out of 81 sugar mills, production and release data from 79 mills are actively monitored.
“There is no fault in the Track and Trace System,” Dr. Sarwar asserted, while acknowledging the difficulty in making decisions based on future forecasts. He added that mills are currently releasing 18,000 metric tons of sugar into the market daily.
Although he expressed optimism about this year’s sugar production prospects, he noted it is still premature to provide a definitive forecast due to flood-related uncertainties. A representative of the Ministry of National Food Security and Research noted that in 7 out of the past 10 years, sugar prices in Pakistan remained higher than global prices. However, from 2021 to 2023, domestic prices were lower than those in the international market.
The panel’s convener observed that sugar prices are currently around 40% higher in Pakistan after including freight costs. The landed price of imported sugar, inclusive of all taxes, is Rs197 per kilogram.
Panel member Farhan Chishti asked about penalties imposed on sugar mills for price-fixing and cartelization. Officials replied that penalties amounting to billions of rupees have been levied.
A representative from the Competition Commission of Pakistan (CCP) informed the panel that two previous investigations—one in 2009 and another covering 2019–2021—found clear evidence of price manipulation and cartelization by PSMA and individual sugar mills.
The CCP imposed fines totalling Rs 44 billion, but the matter was referred back to the Commission by the Appellate Tribunal after a split decision, in which the then Chairperson cast the deciding vote.
“If PSMA and sugar mills made billions through price manipulation, CCP also imposed penalties in the billions,” the CCP official stated.
The Securities and Exchange Commission of Pakistan (SECP) also shared an updated list of directors of 191 companies, including sugar mills, based on their most recent statutory filings.
The panel, chaired by Dr. Mirza Ikhtiar Baig, also requested the latest minutes from the committee led by Power Minister Sardar Awais Leghari regarding the deregulation of the sugar sector. These would be reviewed for inclusion in upcoming policy recommendations.
Copyright Business Recorder, 2025