Customs valuation rate on import of vehicles with engine displacement of 1,800CC and above has been increased by the Directorate of Customs Valuation.
H.M. Shehzad, Chairman All Pakistan Motor Dealers Association (APMDA), has informed that the duty for such vehicles would be raised by Rs. 200,000 to Rs. 1.5 million depending on the model. He added that there are about 400 vehicles in this range and that the customs valuation mechanism has been changed without taking stakeholders into confidence.
According to the Chairman, no announcement was made and the decision was so sudden that the association members had to suspend the clearance of about 200 vehicles at the port due to the higher valuation. He said that the government will not get Rs. 3 billion in tax revenue they want as vehicles are not being cleared at the port.
Customs duty for imported vehicles would be raised by Rs. 200,000 to Rs. 1.5 million depending on the model.
APMDA members sent a letter to Ishaq Dar on April 27, informing him that since 2008, assessment of custom duties for imported vehicles (new and used) is finalized by the consensus of all stakeholders including the association and local assemblers.
The members said that between 2008 and 2016, customs valuation rules were based on a principle where freight-on-board (FoB) arrived with a deduction of 20 percent from manufacturers’ suggested retail price due to local taxation on domestic models of vehicles which were being imported into the country.
Shehzad said that the association had previously pointed out to the Directorate Customs about mistakes in the customs valuation ruling of February 21, 2017. APMDA had filed a review petition to DG Customs Valuation under section 25D of the Customs Act, 1969.
Even before the Director General for Customs Valuation could issue a review order, the department issued a letter on April 18 revising the valuations by increasing duty on some categories of vehicles. APMDA then met DG Customs on April 26 requesting him to rectify the issue. The taxation department has straight out refused to withdraw the order.