Pakistan Government Considering To Almost Double Fixed Taxes On Used Imported Cars

[The Sandman]

26th May 2016,

It has been reported that the government is considering to rake up the fixed duties on used imported cars. The BR report claims that the “well-informed sources” in Federal Bureau of Revenue have revealed the news of potential substantial tax increase to the paper. The report says that the duties and taxes rates are fixed in US dollars under SRO 577(I)/2005. Since the fixed duties are kind of bottled-up, they are causing the government a loss of tax revenue. Also, subsidizing the import of used cars is hurting the existing local manufacturers as well. The duty structure in SRO 577(I)/2005 was as follows:

There were a few amendments to the structure, and the last one was made on November 30, 2015. The last change only targeted car with engines above 1000cc. Smaller engine capacity cars (800cc and 1000cc) were left alone and in return had very low tax rates. The report says that locally produced small car Suzuki Mehran has the market share of 78pc compared to small imported car with 22pc market share. In numbers, its 35,260 units of Mehran compared to 9,860 units of imported kei cars. But the interesting point to be noted here is that a locally produced car such as Suzuki Mehran consumes around locally made auto parts worth Rs310,000 per vehicle whereas for vehicles with engine capacity between 801cc-1000cc are made up of locally made auto parts worth approximately Rs375,000 per vehicle. The FBR sources are saying that the government argues that if you roughly calculate the tax that the government lost on each unit of those imported units, (Rs310000 multiplied by 9,860), it reaches to Rs3bn per fiscal year. And in a similar way, the tax loss on 801cc-1000cc cars reach to staggering Rs4bn (10,432 units were imported of same engine capacity). The government is eyeing the loss and are not happy about it.

The report claims that the sources are saying that the new proposed duty for Asian brand cars under 800cc is $7,443 per unit compared to the previous duty of $3575 per unit. The new proposed duty was calculated as an average of the correct duty of Mira, Alto, Move and Wagon R models. Similarly, the proposed duty for Asian brand 801cc to 1000cc cars is $9,308 compared to $5000 per unit. And the proposed duty is the average of correct duties on Toyota Vitz and Passo cars.

Interestingly, APMDA (All Pakistan Motor Dealers Association) has asked the government to allow the commercial import of used cars that are up to 5 years old, compared to current three-year rule for the upcoming 2016-27 budget recommendations. APMDA Chairman H.M. Shahzad says that the government needs to take this step in order to break the monopoly of existing automakers and also to increase the choices of vehicles for the Pakistani auto consumers. However, only registered APMDA members will be issued commercial import license for the sake of transparency.

The proposed taxes are almost double to what the importers are paying right now. These small cars in the under 800cc to 1000cc engines category was most popular only because they were relatively cheaper and were providing far better options compared to locally assembled cars of the same class. And that is why they were so in demand. And now the government after the same thing. Let’s how the things roll out in the end, but until then, maybe it’s best to get yourself a used kei car before the new budget.
http://www.pakwheels.com/blog/pakis...ost-double-fixed-taxes-on-used-imported-cars/
@Max Pain

 

[AZADPAKISTAN2009]

Pakistan should charge a 10-15% Tax on import of cars based on the Market price of the car

+ Used cars should not be allowed to enter Pakistan as they have older engines with none fuel efficient engines

 

[Hashim Deo]

We should encourage assembling and making of cars in Pakistan rather than using imported cars.

 

[BRAVO_]

so they as usual they sill increase the taxes to support the domestic car manufacturing companies... but ... truth is .. they are given them a monopolistic control of market. though the new car prices in pakistan are almost similar as they are in other countries but why used cars are cheap ?

Answer is

At this time the major manufacturers in the Automotive industry in Pakistan are Honda, Toyota and Suzuki

Pakistan had Nissan and Kia/Hyundai along with Proton but unfortunately they pack their bags and left. FAW is still in its infancy.

Well, in countries like Saudi Arabia or other gulf countries, the used cars are quiet cheaper than Pakistan and there is an abundance of car companies for example, Hyundai, Honda, KIA, Toyota, Renault, Jeep, GMC, Chevrolet, and the list goes on.

So when you want to buy a used car there the options that you might have are in numbers, but in Pakistan, we are limited to the cars, their types, and companies, we don’t have many options in our budget, the most that we would compare would be 3 cars at once. so more taxes will worst the situation more and more and above said three companies will gain more and more monopolistic control since competition of foreign brands will disappear and people will be left with only few choices

 

[Max Pain]

26th May 2016,

It has been reported that the government is considering to rake up the fixed duties on used imported cars. The BR report claims that the “well-informed sources” in Federal Bureau of Revenue have revealed the news of potential substantial tax increase to the paper. The report says that the duties and taxes rates are fixed in US dollars under SRO 577(I)/2005. Since the fixed duties are kind of bottled-up, they are causing the government a loss of tax revenue. Also, subsidizing the import of used cars is hurting the existing local manufacturers as well. The duty structure in SRO 577(I)/2005 was as follows:

There were a few amendments to the structure, and the last one was made on November 30, 2015. The last change only targeted car with engines above 1000cc. Smaller engine capacity cars (800cc and 1000cc) were left alone and in return had very low tax rates. The report says that locally produced small car Suzuki Mehran has the market share of 78pc compared to small imported car with 22pc market share. In numbers, its 35,260 units of Mehran compared to 9,860 units of imported kei cars. But the interesting point to be noted here is that a locally produced car such as Suzuki Mehran consumes around locally made auto parts worth Rs310,000 per vehicle whereas for vehicles with engine capacity between 801cc-1000cc are made up of locally made auto parts worth approximately Rs375,000 per vehicle. The FBR sources are saying that the government argues that if you roughly calculate the tax that the government lost on each unit of those imported units, (Rs310000 multiplied by 9,860), it reaches to Rs3bn per fiscal year. And in a similar way, the tax loss on 801cc-1000cc cars reach to staggering Rs4bn (10,432 units were imported of same engine capacity). The government is eyeing the loss and are not happy about it.

The report claims that the sources are saying that the new proposed duty for Asian brand cars under 800cc is $7,443 per unit compared to the previous duty of $3575 per unit. The new proposed duty was calculated as an average of the correct duty of Mira, Alto, Move and Wagon R models. Similarly, the proposed duty for Asian brand 801cc to 1000cc cars is $9,308 compared to $5000 per unit. And the proposed duty is the average of correct duties on Toyota Vitz and Passo cars.

Interestingly, APMDA (All Pakistan Motor Dealers Association) has asked the government to allow the commercial import of used cars that are up to 5 years old, compared to current three-year rule for the upcoming 2016-27 budget recommendations. APMDA Chairman H.M. Shahzad says that the government needs to take this step in order to break the monopoly of existing automakers and also to increase the choices of vehicles for the Pakistani auto consumers. However, only registered APMDA members will be issued commercial import license for the sake of transparency.

The proposed taxes are almost double to what the importers are paying right now. These small cars in the under 800cc to 1000cc engines category was most popular only because they were relatively cheaper and were providing far better options compared to locally assembled cars of the same class. And that is why they were so in demand. And now the government after the same thing. Let’s how the things roll out in the end, but until then, maybe it’s best to get yourself a used kei car before the new budget.
http://www.pakwheels.com/blog/pakis...ost-double-fixed-taxes-on-used-imported-cars/
@Max Pain

It seems the government is doing everything in its power to keep us using the crappy Old mehrans since that all we're going to be left with. The Kei cars are popular because they're relatively cheap as compared to other imported cars.
I thought they were planning to end the monopoly of Suzuki, this step wont help.

Pakistan should charge a 10-15% Tax on import of cars based on the Market price of the car

+ Used cars should not be allowed to enter Pakistan as they have older engines with none fuel efficient engines

Actually its the opposite, the 660 cc cars despite being old still perform well and thats why people do prefer them,
there's a reason why they are being imported.
if we had a viable option locally, we wouldve never gone for an imported option that costs too much for maintaining

 

[RazorMC]

An 800cc car would cost a third of the $4800 tax itself.

Why are so messed up?

 

[ziaulislam]

Pakistan should charge a 10-15% Tax on import of cars based on the Market price of the car

+ Used cars should not be allowed to enter Pakistan as they have older engines with none fuel efficient engines

you are extremely ignorant.
the engines used in 2004 imported cars is more fuel efficient than 2016 cars, dont believe just check them online world is at euro 4 since early 200s our makers are sitting at euro 2 standards. so almost always imported car will be better for everybody

our econmy has been destroyed by not allowing free market/import of vehicles, causing the social sector to suffer, if local car makers are not going to provide the needs it doesnt make sense to deprive the people from it.

do you know thousands of people die because govt doesn't allow import of vehicles, yes, lack of airbags/saftey, pollution and poverty,

it make sense not to allow import of vechiles greater than 5-10 years old but to tax new cars greater than 15-20% is an injustice to people and pakistani econmy

its simple, local manufacturing having deeper pockets for politicians

 

[Gauss]

Government is not about maximizing revenue. Its about using what it has in the most strategic way. Pakistani mentality is from 1500s. Back then governments only cared about collecting as much money as possible. But today around the world they inject money into their economies in such ways that will maximize economic output and cash flows. With greater economic output governments automatically get greater taxes.

 

[Signalian]

We should encourage assembling and making of cars in Pakistan rather than using imported cars.

Honestly, local is expensive poor quality crap with little or no choice and that is why people have turned to imported cars.

Favourite car = Corolla
New car for low/mid class = Mehran
Decent 4- door New sedan with trunk = City


Is Mehran worth 7000$? it is a tin can with wheels and basic option has no AC.

Basic Corolla XLi has no ABS or power windows at 16000 $.

The choice is usually between Corolla OR Civic Or City.

Pakistan should invite Mazda with Mazda 2 and Mazda 3
Hyundai with i20 / Accent / i30 / Elantra
Kia with Picanto / Rio / Cerato

and there is Volkswagen, Nissan, Mitsubish but no one ventures towards Pakistan because of monopoly of Suzuki, Toyota and Honda with crappy basic models

 

[Hashim Deo]

Honestly, local is expensive poor quality crap with little or no choice and that is why people have turned to imported cars.

Favourite car = Corolla
New car for low/mid class = Mehran
Decent 4- door New sedan with trunk = City


Is Mehran worth 7000$? it is a tin can with wheels and basic option has no AC.

Basic Corolla XLi has no ABS or power windows at 16000 $.

The choice is usually between Corolla OR Civic Or City.

Pakistan should invite Mazda with Mazda 2 and Mazda 3
Hyundai with i20 / Accent / i30 / Elantra
Kia with Picanto / Rio / Cerato

and there is Volkswagen, Nissan, Mitsubish but no one ventures towards Pakistan because of monopoly of Suzuki, Toyota and Honda with crappy basic models

I am not saying that we should stop improving our industry. What we need is new players entering the scene with better competitive environment and encouragement to produce locally. Imagine 6 or 7 Brands making cars in Pakistan the competition alone would bring down the prices.

 

[IceCold]

Please tell me how exactly are local makers getting affected if they still continue to make craps like Cultus and Mehran and others like Indus strips cars with even basic features such as immobilizer and when they add, they increase the price. Every local manufacture from Honda to Toyota and Suzuki are nothing but looters just like our government and hence we have a shitty automobile policy and shitty cars on roads. Imagine a toyota XLI worth 17 lacs with no power windows or mirror adjusters or even immobilizer.
I am no fan of JDM but it really gave Mehran a kick on its ***. I remember before JDM suzuki bookings for cultus and Mehran remained closed and there was no option other than to buy this crap on black rate also called own. At least with JDM people now have option to either buy a shitty mehran worth 700000 or go for a JDM with all standards features like powerwindows, auto tranny, central locking etc.

 

[Defender of Peace]

It means we are on mercy of same old Looters of existing car manufacturers as usual. Pathetic Car Mehran in Rs.0.7 Million, I dont know I cry or laugh

 

[egodoc222]

Why can't you simply Import from India?

 

[Saquib]

Just open up the car market for all cars - just think of the revenue from petrol etc.....

 

[Gauss]

these are the used cars people are buying that will be effected.

there are many more but for now could only think of them