Government of Pakistan removes regulatory duties on used cars up to 1800cc, while reducing taxes on new cars

According to recent reports, the Pakistani government has eliminated the regulatory duties (RD) on used car imports up to 1800cc. This decision comes after the government imposed a 100% RD on these cars in August 2022 under SRO1571(I)/2022. The RD was initially supposed to expire in February 2023, but the government extended the deadline to March 31, 2023. However, there will still be a 70% RD, which is a reduction from the previous 100%, on cars above 1800cc.

Additionally, the government has cut duty rates on new cars, which is expected to result in a significant reduction in prices for new cars. It’s worth noting that the government’s policy to contain imports through heavy taxation had an impact of $400 million, but it also had a significant negative impact on the car industry across the country.

The two SROs that increased RD and additional customs duties expired on March 31 as the Tariff Policy Board chairman refused to extend them. Consequently, prices are expected to decrease in the coming days. The abolition of 100% RD on used cars up to 1800cc will provide significant relief to consumers. However, new cars in this category will still have a 15% RD, in addition to other taxes.

PakWheels.com reached out to FBR officials for a statement, and one official confirmed the news. The official stated that they could not officially confirm it until the release of SRO. The officer added, “Hopefully, the SRO will be uploaded on our website today.”

Reports suggest that 500 to 700 imported cars with various engine capacities stuck at ports due to the non-availability of foreign currency will also benefit from this reduction in taxes. It’s important to note that while there will be no RD on used cars up to 1800cc, there will still be a 70% RD on vehicles over 1800cc, despite some reports stating that it has been entirely removed.

Moreover, additional customs duties have also been withdrawn from these cars. The government imposed a 35% ACD on such vehicles in August 2022.

However, the announcement comes as the State Bank of Pakistan (SBP) is still not issuing LCs for locally assembled car kits, resulting in repeated shutdowns, especially by Toyota, Honda, and Suzuki, also known as the Big 3. While the removal of 100% RD will benefit importers and companies that sell CBUs in the country, there seems to be no relief in sight for the local industry in the near future.