ISLAMABAD: In a significant policy shift aimed at reducing the financial burden on exporters, the government has decided to withdraw the 0.25 percent Export Development Surcharge (EDS) with immediate effect, officials in the Commerce Ministry told to a pivate news paper. The move is expected to enhance Pakistan’s competitiveness in global markets and provide long-awaited relief to the export sector.
The decision was finalized during a high-level meeting chaired by Prime Minister Shehbaz Sharif and attended by senior ministers, officials, and experts. Earlier, the Prime Minister had constituted a Working Group on EDS, led by Musadaq Zulqarnain, to review the Export Development Fund (EDF) and propose reforms. The group included private-sector representatives and senior officials such as Secretary Commerce Bilal Azhar Kiyani and EDF Executive Director Mosharraf Zaidi.
The 0.25 percent EDS—collected upon realization of export proceeds—was originally funneled into the EDF to support trade promotion, research, training, marketing, and sectoral development. After extensive review, the Working Group submitted its recommendations last week, paving the way for the surcharge’s withdrawal.
During Monday’s meeting, the Prime Minister also ordered the establishment of an interim Steering Committee, led by private-sector members, to supervise the use of the Rs 52 billion currently held in the EDF. He stressed that EDF funds must now be directed strictly toward research and development, skills training, and export competitiveness—not infrastructure projects.
Officials acknowledged that export-oriented industries currently face a disproportionately high tax burden compared to domestic-focused businesses. Another Working Group, headed by Shahzad Saleem, has already submitted proposals on this issue, with a dedicated meeting expected soon.
The government will revise the existing law governing EDS collection after consultations with stakeholders. A new mechanism will also be developed to finance the operational needs of TDAP and other trade-related bodies following the surcharge’s removal.
Exporters welcomed the move, arguing that the EDS had become unjustifiable, especially after the withdrawal of government incentives under IMF-mandated reforms. Some experts recommended phasing out the EDF entirely, though a detailed assessment is still pending.
Prime Minister Sharif also directed that a third-party audit of the EDF—covering the past five years—be conducted according to international standards. The government plans to appoint a private-sector professional as chairman of the EDF to ensure transparency and efficiency.
