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.
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.
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.