Home »Taxation » Pakistan » Duties, taxes on imported vehicles: PM urged to suspend amendment

  • News Desk
  • Oct 30th, 2017
  • Comments Off on Duties, taxes on imported vehicles: PM urged to suspend amendment
In light of the misuse of car import schemes, a few days ago the Ministry of Commerce issued SRO 1067(I)2017, an amendment to IPO 2016, that states that all duties and taxes on imported vehicles in new or used conditions either under personal baggage or gift scheme will be paid out of foreign exchange arranged by Pakistani nationals themselves.

According to documents available with Business Recorder, a letter addressed to the Prime Minister Khaqan Abbasi claims this amendment will hurt local car traders and the economy at large. The document contended that most imported used vehicles come into Pakistan through the personal baggage scheme in terms of Appendix-E of IPO 2016, and no efforts were made by the Ministry of Commerce or FBR to amend this policy and bring this trade within the ambit of fiscal statutes.

Whereas arranging payment of duties and taxes in local currency is easier for importers, the amendment would make this task ever more difficult. The document states "After amendment under reference, it is impossible to arrange transfer of foreign currency through "hawala/hundi" in the name of Pakistani National in whose name the vehicle has been imported or to buy dollar from open market and thereafter to obtain bank encashment certificate for payment of duty and taxes".

Moreover, it would further deplete the revenue of FBR as nearly 50 percent of revenue at Karachi Collectorate's was being collected on account of duties and taxes paid by importers on used cars. Meanwhile, also increasing the rate of US dollar in open market if the importers take recourse of buying dollars from open market.

The letter warns that the amendment would discourage the import of used cars which would bolster the existing local assemblers who enjoy a monopoly in the country. This would further deprive consumers from attaining imported vehicles that are competitively priced. The move could also potentially encourage car smuggling and thereby significant financial loss to the exchequer.

The letter urged the Prime Minister to suspend the amendment claiming the amendment would "not only cause unrest in trade but will affect the collection of revenue and loss of billions to the traders, auto dealers, investors, and foreign living Pakistani nationals".



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