ISLAMABAD/PESHAWAR: The FBR has issued Customs General Order (CGO) No. 08 of 2025 on November 27, 2025. This order amends the original CGO 12 of 2002, defining the procedure for goods imported by industries located in tribal areas (FATA/PATA).
A major loophole in a decades-old tax concession for tribal areas has been systematically exploited, causing billions in losses to the national exchequer and devastating key domestic industries, an investigation has revealed.
The scandal revolves around the misuse of concessional tax rates meant for industries located in the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA). Instead of being used for local industrial development, goods imported under these concessions were allegedly diverted and sold in the commercial markets of Karachi and other major cities.
The issue was brought to light after the Peshawar High Court took notice of the widespread misuse. However, despite the court’s involvement, remedial action was stalled due to the absence of a crucial official directive from the Federal Board of Revenue (FBR).
Sources confirm that Collector of Customs Peshawar, Farrukh Shareef, had formally approached the Peshawar High Court, apprising the judges of the massive revenue drain and commercial distortion. Yet, in the absence of a revised legal framework from the FBR, authorities’ hands were tied, and the misuse continued unabated.
Under the Sales Tax Act, 1990, industries in tribal areas are entitled to import plant, machinery, equipment, and industrial inputs at heavily concessional tax rates. This policy was designed to spur economic growth in underdeveloped regions.
However, unscrupulous importers allegedly used fake addresses and documentation to claim these concessions for goods that were never intended for FATA or PATA. The consignments, upon arrival at the port in Karachi, would be cleared under the pretext of being transshipped to tribal areas, only to be siphoned off and sold illegally in the open market.
This provided them with an unfair price advantage, allowing them to undercut legitimate businesses that paid full taxes.
The ripple effects of this scam have been severe.
Edible Oil Industry: The domestic edible oil industry was hit particularly hard, with imports reportedly plummeting as the market was flooded with cheaper, tax-evaded imported oil.
Cloth and Steel Sectors: Similarly, the local cloth and steel manufacturing sectors suffered significant damage, as their markets were undercut by imports that had avoided standard duties and taxes through the FATA/PATA route.
The newly issued CGO mandates a stringent monitoring and transportation system for all such imports. Key measures include:
1. Designated Clearance Port: All containerized cargo must now be cleared exclusively at the Azakhel Dry Port near Peshawar, not at the southern seaports.
2. Bonded Carriers and Tracking: Transport of these goods from the port of entry to the final destination must be done only by bonded carriers. Their movement will be continuously monitored under the Tracking and Monitoring of Cargo Rules, 2023.
3. Customs Escort: In cases where electronic tracking is not immediately available, the transshipment consignments will be physically escorted by Customs officials to ensure they reach their intended destination.
The favor was given to facilitate the under-privileged people in tribal areas. The facility was grossly misused and after long delays, FBR issued this CGO. Customs will get this CGO approved from assembly within 180 days.
While the new order has been widely welcomed as a necessary step, questions are being raised about the significant delay in its issuance. The prolonged inaction allowed the misuse to bleed the national treasury and cripple compliant industries for years, highlighting critical gaps in Pakistan’s customs enforcement and regulatory oversight.
The FBR now faces the challenge of rigorously implementing these new rules to restore a level playing field and reclaim the lost revenue.