Ministry approves payment of duty/tax against vehicle import in foreign remittance only

KARACHI: Ministry of Commerce has endorsed the mechanism devised by State Bank of Pakistan (SBP) for payment of duty and taxes on import of vehicles under personal baggage, transfer of residence and gift schemes.
According to a Commerce Division notification dated January 09, 2018, in case of import of vehicles under personal baggage, transfer of residence or gift scheme, the remittance for payment of duty and taxes should originate from the account of Pakistan’s national sending the vehicle from abroad.
The remittance should either be received in the local account of Pakistani national sending the vehicle from abroad. In case, the account of overseas Pakistani is non-existent/inoperative, the remittance should be received in the account of overseas Pakistani’s family member as defined in the import policy order.
In light of the misuse of car import schemes and import rationalization measures for vehicles, Ministry of Commerce in October 2017 notified that all duties and taxes on imported vehicles in new or used conditions either under personal baggage or gift scheme would be paid out of foreign exchange arranged by Pakistani nationals themselves or local recipient supported by bank encashment certificate showing conversion of local currency.
However, certain quarters contended that the amendment would hurt local car traders and the economy at large as arranging payment of duties and taxes in local currency was easier for importers and the amendment would make this task even more difficult.
Imported cars traders are of the view it would further deplete the revenue government as nearly 50 percent of revenue at Karachi Customs was being collected on account of duties and taxes paid by importers on used cars. Moreover, it would increase the rate of US dollar in open market if the importers took course of buying dollars from open market.
An official said that the plan could not be implemented as the importers and other quarters involved had approached the court against the said statutory order. The court would conduct hearing in this regard on January 23, 2018.
Meanwhile, the central bank formulated a mechanism to streamline the transfer of foreign exchange through formal channel against the duty and taxes leviable on import of vehicles. Sources said the mechanism had been forwarded to Ministry of Commerce, which has duly been approved.
A car importer said this would discourage the import of used cars, which would bolster the existing local assemblers who enjoy a monopoly in the country. Local assemblers have come under severe and continuous criticism for the monopoly they have created.
The official said this would discourage import of vehicles, which was a burden on the country’s trade balance as well as it would earn valuable foreign exchange for the country.

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