Import Policy amended to enforce collection of duty/tax on imported cars in forex

KARACHI: Hundreds of imported vehicles parked at the ports awaiting clearance, have been stranded either for re-export, or these would ultimately perish causing losses to the importers, as the government has linked import of vehicles with payment of duty/tax in foreign exchange.

The commercial car traders have long been misusing the transfer of residence and gift scheme and less that 3.0 percent of the vehicles were actually imported by overseas Pakistanis for the purpose stipulated in the schemes.

The commercial importers had developed contacts with the overseas Pakistanis and used their passports for importing vehicles and sold the same in the market. A Customs agent said the laborers working abroad had been importing expensive luxury vehicles, which actually were brought by the car traders and the overseas Pakistanis were paid around Rs30,000 for the use of their passports.

The Ministry of Commerce has notified amendments in the Import Policy Order (IPO) to provide legal cover to the Economic Coordination Committee (ECC) decision that duty and taxes are to be made in foreign exchange on imported cars.

SRO No. 52(I)/2019 reads that all vehicles in new/used condition to be imported under transfer of residence, personal baggage or under gift scheme, the duty and taxes shall be paid out of foreign exchange arranged by Pakistan nationals themselves or local recipient supported by bank encashment certificate showing conversion of foreign remittance to local currency.

It adds the remittance for payment of duties and taxes shall originate from the account of Pakistani national sending the vehicle from abroad; and the remittance shall either be received in the account of the Pakistani national sending the vehicle from abroad or, in case, his account is nonexistent or inoperative, in the account of his family.

Under the Import Policy Order 2016 the import of used cars was allowed to overseas Pakistanis under personal baggage, transfer of residence and gift schemes in accordance with the laid down procedures.

However, there were frequent complaints that these schemes were misused by the commercial importers for massive import of used vehicles. In order to contain the misuse of these schemes, the ECC in its meeting held on October 6, 2017 considered the summary by the Commerce Division on Import Rationalization policy.

The decision of the ECC was notified by the Commerce Division on October 20, 2017. The effect of the above decision led to effective restriction in imports of used vehicles which released the pressure on the kerb market as well.

As a result of the decision around 6000 vehicles got stranded at the seaport, causing commercial car importers to raise hue and cry.

Customs agents and commercial car importers urged the government to withdraw the amendments in the Import Policy

Subsequently, on the recommendation of the then advisor to the Prime Minister on finance, revenues and economic affairs, the Commerce Division moved another summary with the proposal that the new requirements be given effect for the vehicle arriving after February 28, 2018. Later, in order to prevent misuse of the schemes and restrict the imports under these schemes to bona fide overseas Pakistanis, the ECC approved certain amendments into import policy with additional conditions.

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