Regulatory Duties On Used Cars Import Abolished?

The government of Pakistan has reportedly abolished the regulatory duties (RD) on the import of used cars up to 1800cc. It is essential to mention that the government imposed 100% RD on these cars in August 2022 under SRO1571(I)/2022. As per the SRO, the RD was imposed till February 2023, but the government pushed the deadline to March 31, 2023. Meanwhile, there will still be 70% RD, reduced from 100%, on cars above 1800cc. 

Loss of Business 

As per the latest media reports, the government has also cut the duty rates for new cars. After this relief, it is expected that the prices of these cars will come down significantly. The government decided on a policy to contain imports through heavy taxation, which made an impact of $400 million but seriously affected the car business across the country.

The two SROs which increased RD and additional customs duties expired on March 31 as the Tariff Policy Board chairman refused to extend them. Resultantly, the prices are expected to come down in the coming days. The consumers of used cars up to 1800cc will get major relief after this 100% RD is abolished. Meanwhile, the new cars in this category will get 15% RD along with the other taxes.

FBR Statement 

PakWheels.com contacted FBR officials for the statement, and one of them confirmed the news. However, he added that he could not officially confirm it till the release of SRO. “Hopefully, the SRO will be uploaded on our website today,” the officer stated. 

Beneficial of Reduced Taxes 

The reports stated that 500 to 700 imported cars with various engine capacities stuck at the ports due to the non-availability of foreign currency would also benefit from this reduction in taxes. There will be no RD on used cars up to 1800cc, but there will be 70% RD on vehicles of over 1800cc. Although there are reports that it is totally removed but these are not true. 

Meanwhile, additional customs duties are also withdrawn from these cars. The government imposed 35% ACD on such vehicles in August 2022.

Still No LCs for Local Industry 

The announcement came as the LCs for kits of locally assembled cars are still not being issued by the State Bank of Pakistan (SBP). This has resulted in repeated shutdowns, especially by Big 3, i.e., Toyota, Honda, and Suzuki. The removal of 100% RD will benefit the importers and companies that sell CBUs in the country, but there seems to be no respite for the local industry, not in the near future.