The government has started taking the required actions in an effort to manage import costs and prevent fiscal slippages. The Federal Board of Revenue (FBR) has increased the regulatory duties (RD) and additional custom duties (ACD) on the import of luxury and non-essential goods, including cars (CBU).
Increase in Regulatory Duty (RD)
According to reports, the previously 15% regulatory taxes on vehicles with a capacity of more than 1000cc have been hiked to 100%. This means that taxes levied on CBU autos increased by 85%. As a result, car costs would reach a new high, which means the local market would see a new round of price increases.
According to SRO1571(I)/2022 from the Federal Board of Revenue, the increased rate of regulatory duty will be in effect from August 22, 2022, through February 20, 2023.
Additional Custom Duties
The following PCT codes are subject to an additional 35 percent regulatory duties charge levied by the FBR on cars:
2323 — Sport utility vehicles -SUVs 4×4
2329 — Sedans and Hatchbacks)
2490 — diesel-powered vehicles
3223 — CKD or SKD kits for SUVs
3225 — all-terrain vehicles (4×4)
3229 — Commercial vehicles
3390 — Other vehicles with internal combustion engines or electric motor
9000 — Vehicle included the SRO.1517(I)/2022.
Previously, the finance minister Miftah Ismail, said that the import ban on luxury and non-essential goods, including imported cars, will be lifted.
Read more: CarFirst shuts down operations in midst of many Pakistani startups collapsing
Govt Ends Car Import Ban
The finance minister claimed that the government opted to relax the restriction in response to the international demand, but it should be emphasized that non-essential imported goods will be subject to three times higher regulatory duties.
“We’ll levy such high charges that these products cannot be imported or at least not in their finished form”. As per finance minister, the cotton, edible oil, and wheat will be my top priorities because I don’t have enough money. I don’t prioritize automobiles or iPhones first.
Miftah Ismail claimed that because we lacked the foreign currency to buy premium cars, 400–600% regulatory duties will be levied.
“Even so, a person can import an automobile that originally costs Rs. 60 million but will cost them Rs. 300–400 million [after the regulatory duties]”.
Heavy regulatory burdens placed on CBU units would in turn cause a new uproar in the local auto industry, and the cost of imported cars would once more experience a significant increase.