Massive Increase in regulatory duties on imported cars

The Federal Board of Revenue (FBR) has increased the regulatory duty (RD) and various other taxes, on the importation of non-essential or "luxury" goods, which also includes Completely Built-Up (CBU) cars.

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For the layman, CBU stands a fully built car that is more expensive vs. a comprehensive disassembly kit (CKD) that has car parts that need to be assembled and is cheaper.

According to reports, the board has increased regulatory duties by 85% on the importation of vehicles with an engine capacity greater than 1000 cc. The prior rate was 15% and the new rate is 100%. The implication is that CBUs will see a massive increase in prices.

The Federal Board of Revenue (FBR) has issued a Statutory Regulatory Order (SRO) 1571(I)/2022 to notify the increase in RD and discourage the importation of luxury UBC into Pakistan. The step is to prevent further inflation and depletion of foreign exchange reserves.

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The board has also levied 35% additional customs duty (ACD) on vehicles under the following PCT codes:

8703.2323 — Sport utility vehicles -SUVs 4×4
8703.2329 — Sedans and Hatchbacks)
8703.2490 — diesel-powered vehicles
8703.3223 — CKD or SKD kits for SUVs
8703.3225 — all-terrain vehicles (4×4)
8703.3229 — Commercial vehicles
8703.3390 — Other vehicles with internal combustion engines or electric motor
8703.9000 — Vehicle included the SRO.1517(I)/2022.

Last week, Federal Finance Minister Miftah Ismail lifted the ban on the importation of luxury and non-essential goods, including completely built-up (CBU) cars. However, he went on to say that the government will tax heavily so that it is virtually impossible to import.

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