In yet another attempt to exploit the rights of the occupied Gilgit-Baltistan (G-B), federal agencies have refused to comply with the local court’s order to “restrain the collection of income tax, sales tax, and additional sales tax on imported items from China through the Khunjerab Pass.”
On July 20, the Gilgit-Baltistan Chief Court directed the Federal Board of Revenue (FBR) and Customs to stop collecting federal taxes. The petition, filed by Muhammad Iqbal, president of the G-B Importers and Exporters Association, challenged the various taxes imposed by revenue authorities at the Sost Dry Port on Chinese goods.
According to the law, G-B is exempt from sales, income, and additional sales taxes on imported items. Yet, the FBR and Customs were “illegally” collecting and deducting these taxes from G-B traders on imports from China. This incident highlights the helplessness of the people of G-B and the authoritarian tendencies of Islamabad, which unabashedly collude with Chinese authorities to exploit local resources in the occupied region.
The discontent among G-B traders over these taxes has already led to numerous strikes and the suspension of trade activities in the occupied region since April, including a demonstration in early July and the ongoing strike that began on July 24. Despite the court order on July 20, the tax authorities refused to comply, prompting local traders to stage a sit-in. Initially, the sit-in was announced at the gate of the dry port, but it escalated on August 7 when protesters blocked the Karakoram Highway (National Highway 35), a key route of the China-Pakistan Economic Corridor (CPEC), effectively halting travel and trade between Pakistan and China through the Khunjerab Pass.
The protesters have vowed to continue their demonstration until their demands are met and have warned of expanding protests across G-B. While there are reports of ongoing negotiations between federal government agencies and local traders in G-B, these protests are likely to persist in the future.
The region has experienced several mass protests over the past three years, particularly during and after the COVID-19 crisis, in response to Islamabad’s discriminatory policies. In January, routine life in Gilgit-Baltistan was severely disrupted as the region remained shut down for weeks due to protests against the increase in subsidized wheat prices and other grievances. Demonstrations took place across the region, with protesters marching to Gilgit from the Nagar, Hunza, and Ghizer districts.
Shops, business centers, and restaurants were closed for days, trade activities were suspended, and inter-district and inter-provincial transportation was halted, causing a significant hardship for G-B residents traveling to other parts of Pakistan. Among the 15 demands made by the protesters was the “withdrawal of various taxes,” a demand that the federal government ultimately failed to meet.
On August 4, Gilgit-Baltistan traders filed a contempt of court petition against the Federal Board of Revenue (FBR) and Customs for failing to implement the G-B Chief Court’s July order. Federal revenue bodies argued that the G-B Chief Court had “no jurisdiction” over matters of federal taxes in the occupied region.The high-handedness of the central bodies is evident in this case, as local G-B traders have limited legal recourse to challenge the illegal tax collection. In an effort to pressure Islamabad, hundreds of traders, transporters, laborers, customs clearing agents, and political workers have joined the sit-in.
Additionally, protestors staged a sit-in outside the Pakistan Immigration Office in Sost, which disrupted the travel of thousands of foreign and local passengers by road to China, including several Chinese nationals. This protest has thus become an international embarrassment for Islamabad. A few foreign tourists even joined the sit-in on the Karakoram Highway to show solidarity with local traders, urging authorities to resolve the issue promptly. Federal agencies are well aware of the financial significance of the Khunjerab Pass between the two countries. They are, therefore, eager to secure a substantial share of the revenue generated from trade imports from China.
Beijing relies heavily on federal agencies in Pakistan to expand its unlawful presence in G-B. For decades, local leaders and human rights organizations in G-B have protested against the increasing influence of China and a growing number of Chinese nationals in the region. Pakistan’s military establishment and civilian leadership have facilitated the unchecked influx of Chinese money and nationals into G-B, often under the guise of large infrastructure projects like the Diamer-Bhasha Dam.
As a result, residents of G-B feel doubly exploited and marginalized by two foreign powers—China and Pakistan.For local traders, the complete shutdown of cross-border trade represents a last-ditch effort to resolve the issue. The suspension of trade activities since April this year has been particularly devastating, as locals, who depend on cross-border trade for their livelihoods in the absence of industries or private sector jobs, have been left without work.
