On October 6, 2017 Economic Coordination Committee (ECC) of the Cabinet ECC approved that all vehicles in new condition to be imported under transfer of residence, personal baggage or under gift scheme, the duty and taxes will be paid out of foreign exchange arranged by Pakistani nationals themselves or local recipients supported by bank encashment certificate showing conversion of foreign remittance to local currency.
The sources said, a decision of the ECC was notified by the Commerce Division vide SRO 1067(I)/2017 on October 20, 2017. The Import Policy Order provides protection to the shipments in the pipeline against any abrupt policy changes. Para 4 of the IPO-2016 provides that amendments brought in this order [IPO-2016] from time to time shall not be applicable to such imports where Bill of Lading (B/L) or Letters of Credit (L/C) was issued or established prior to the issuance of amending order.
According to the prevalent policy, import of used vehicles takes place under the gift, baggage and transfer of residence schemes for the overseas Pakistanis who ship such vehicles individually. Unlike the commercial importers, the individual overseas Pakistanis are not updated on policy changes on a daily basis. Consequently, a considerable number of consignments by the overseas Pakistanis shipped after the issuance of the SRO 1067(I)/2017 have stuck at ports.
Meanwhile, Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Dr Miftah Ismail, who hails from Karachi, the hub of imported used cars, has also suggested addressing the hardship of those who have already imported the vehicles saying that new requirements be given effect for vehicles arriving after February 28, 2018, when the importers could be required to pay duties at rates higher than inter-bank and open market foreign exchange rates.
The sources further stated that due to lack of clarity between Federal Board of Revenue (FBR and State Bank of Pakistan(SBP) on the procedure for payment of duty/ tax on import of vehicles, the requisite procedure was finalized on January 9, 2018.
The sources said, Commerce Ministry has proposed to the ECC that those vehicles may be cleared by the custom authorities where bill of lading was issued on or before January 9, 2018.
The duties and taxes will be paid recommended by the Advisor to Prime Minister. Thereafter, no further relaxation will be granted for any of the imported vehicles under these schemes.
The sources said, Commerce Ministry summary on used imported cars is expected to be considered by ECC in its forthcoming meeting.