FEDERAL Board of Revenue’s decision to impose a ten percent ad valorem processing fee on Afghan Transit Trade (ATT) goods is a step in the right direction to curb one of the most persistent economic leakages affecting our trade system.
For years, the ATT route has been exploited as a backdoor for smuggling goods into the country under the guise of transit to Afghanistan.
This not only results in massive revenue losses estimated to be in the billions of dollars annually but also severely undermines local industries that struggle to compete with the influx of untaxed and often cheaper imported goods.
The newly imposed fee, announced through a Statutory Regulatory Order, aims to address this problem by adding a financial barrier to the misuse of the transit trade.
By raising the cost of transit goods, the measure makes it less profitable for smugglers to divert these imports into Pakistani markets.
This is likely to help reduce the volume of illegal trade, protect legitimate businesses and contribute to revenue generation for the government.
However, while this processing duty is a useful deterrent, it is not a complete solution.
Smuggling through the ATT corridor is a deeply entrenched issue that requires a more comprehensive response- one that combines regulation, technology, enforcement and cooperation.
While border management has been strengthened on our part, it is also important to fully digitize transit monitoring and modernize customs infrastructure to ensuring that such goods do not re-enter the local market through illicit channels.
Equally important is closer coordination with Afghan authorities to verify the end-use of goods and enforce compliance on both sides of the border.
The government must also enhance legal enforcement by introducing stricter penalties for those involved in smuggling and improving the prosecution of economic crimes.
Furthermore, building awareness among traders and involving industry stakeholders in monitoring market dynamics can help identify and eliminate sources of illegal goods more effectively.
