Pakistan will prohibit companies operating in Export Processing Zones (EPZs) from selling products in the local market from September 2026, implementing an International Monetary Fund (IMF) condition that requires EPZ manufacturers to export their entire production.

According to Finance Ministry documents, the move will end the long-standing concession that allowed EPZ companies to sell up to 20 percent of their output within Pakistan. Once the new rule takes effect, EPZ manufacturers will be required to export 100 percent of their production.

The ministry said Pakistan asked the IMF to retain the 20 percent domestic sales allowance, but the request was rejected. The government also sought approval to establish additional Export Processing Zones, which the IMF did not accept.

Despite agreeing to implement the measure, the government intends to raise the issue again during the next IMF review in an effort to restore the limited local sales facility for EPZ businesses.

To implement the commitment, the Finance Ministry has forwarded a proposal to the Federal Board of Revenue (FBR) seeking the formal withdrawal of the exemption that currently permits domestic sales by EPZ manufacturers.

The documents also reveal that an independent foreign consultant concluded that Export Processing Zones do not distort Pakistan’s domestic market and did not recommend removing the tax incentives available to EPZs or Special Economic Zones (SEZs).

However, despite the consultant’s findings, the IMF maintained its position that companies operating in Export Processing Zones should export all of their production and should no longer be allowed to sell goods in the domestic market.