Pakistan may impose 5% duty on ultra-processed foods in upcoming budget

Pakistan's tax collection authority — the Federal Board of Revenue — on the recommendation of the Ministry of National Health Services has finalized a proposal to impose a 5% Federal Excise Duty (FED) in the upcoming budget on over five dozen types of ultra-processed food items to collect over PKR 200 billion.

Sources said that the Ministry of National Health Services has proposed a 20% health tax on a wide array of processed and ultra-processed food and beverage products to reduce the consumption of unhealthy foods and generate additional revenue for public health initiatives.

The International Monetary Fund has also agreed with this proposal and government will announce 5% FED on a wide range of products such as frozen foods, chips, carbonated drinks, instant noodles, ice cream, biscuits, frozen meat, sauces, ready-to-eat meals, sausages, and other similar items in the Finance Bill to be tabled in the National Assembly on June 2.

Sources said that this will be the largest indirect tax measure in the forthcoming budget, with a substantial expected impact on tax collection.

Apart from this, sources said that the government will also withdraw billions of rupees in tax exemptions in next year's budget.