ISLAMABAD: Federal Board of Revenue (FBR) is reportedly resisting any relief to National Steel Complex Limited (NSCL) in reverse sub-contracting due to which the firm has not been able to honour its local contracts outside Export Processing Zone (EPZ), well informed sources told Business Recorder.
This was the crux of a meeting between the delegation NSCL and Minister for Commerce, Jam Kamal and his tariff team. During the meeting, the delegation briefed the Minister on concerns arising from the existing duty structure applicable to raw materials, intermediate goods, and products processed through Export Processing Zones (EPZs).
Representatives explained that industries importing raw materials into the tariff area are required to pay customs duties at the import stage, while additional duties are again imposed when processed or value-added products return from EPZs to the tariff area.
The delegation informed the Minister that the current mechanism effectively results in double taxation on industrial products and increases the cost of manufacturing, particularly for industries involved in machining, lining, coating, fabrication, and other value-added industrial activities. They proposed that duties should only apply to the additional value created within the EPZ instead of the total value of the finished product.
Participants also highlighted technical complexities related to customs valuation, classification of processed products, and determination of value addition during industrial processing. They emphasized the need for transparent and practical mechanisms to facilitate genuine industrial activity while ensuring regulatory compliance.
During the discussion, it was clarified that NTC primarily functions as a technical body on tariff-related matters, providing analytical and advisory support regarding tariff structures and trade remedy measures.
The Commission is responsible for implementing trade protection instruments, including safeguards against unfair trade practices by foreign exporters to protect local manufacturers.
Matters relating to customs valuation, industrial costing, regulatory enforcement, and sector-specific compliance fall within the respective mandates of relevant authorities such as FBR, Ministry of Industries, and other concerned regulatory bodies.
The delegation further apprised the Minister of the challenges being faced by long-term industrial projects due to rising energy costs, evolving tariff structures, and changing economic conditions.
Copyright Business Recorder, 2026
So the FBR is blocking relief for NSCL, but they’re fine with double taxation on value-added manufacturing? That’s just going to kill local industry.
Jam Kamal needs to step in and override the FBR on this reverse sub-contracting issue before NSCL defaults on its local contracts.
It’s ridiculous that raw materials get taxed twice just because they go through an EPZ. No wonder NSCL can’t compete.
The FBR always resists any relief, but double taxation on industrial products is a clear barrier to growth. Hope the minister takes action.
FBR and US are central to this development. Their role in this story cannot be understated.
NSCL’s problem highlights a bigger flaw in our EPZ policy—why punish companies for adding value inside Pakistan?