FBR Imposes 60% Regulatory Duty on Imported Vehicles

The Federal Board of Revenue (FBR) has announced a new set of taxes on a long list of goods, including imported vehicles. Under the new Statutory Regulatory Order (SRO) 504(I)/2017, up to 60% ad valorem regulatory duty has been placed on the import of new and old cars, jeeps and sport utility vehicles (SUVs).

Yesterday’s SRO made official the regulatory duty rates that were announced as part of the Federal Budget 2017-18 on May 26^th.

FBR has issued the notification for the regulatory duty on ad valorem basis (in proportion to the estimated value of the goods) for over 500 items. With this step, the government aims to improve revenue collection by charging more taxes from the citizens on import of “non-essential and luxury” products.

It is estimated that this step will increase revenues by Rs. 10 billion.

The latest SRO from the FBR amends the previous one – SRO 482(I)/2009 – which was issued back in 2009.

The list below mentions the regulatory duty on different types of vehicles along with their PCT codes:

• New SUVs with engine capacity between 1801cc-3000cc – 50% duty (8703.2323)
• Used SUVs with engine capacity between 1801cc-3000cc – 60% duty (8703.2323)
• New cars and jeeps with engine capacity between 1801cc-3000cc – 50% duty (8703.2329)
• Used cars and jeeps with engine capacity between 1801cc-3000cc – 60% duty (8703.2329)
• New cars and jeeps with engine capacity over 3000cc – 50% duty (8703.2490)
• Used cars and jeeps with engine capacity over 3000cc – 60% duty (8703.2490)
• New SUVs with engine capacity over 2000cc – 50% duty (8703.3223)
• Used SUVs with engine capacity over 2000cc – 60% duty (8703.3223)
• New All Terrain Vehicles (SBU) – 50% duty (8703.3225)
• Used All Terrain Vehicles (SBU) – 50% duty (8703.3225)
• New cars and jeeps with engine capacity over 2000cc – 50% duty (8703.3229)
• Used cars and jeeps with engine capacity over 2000cc – 60% duty (8703.3229)
• New cars and jeeps with engine capacity over 2500cc – 50% duty (8703.3390)
• Used cars and jeeps with engine capacity over 2500cc – 60% duty (8703.3390)
• Other types of new vehicles – 50% duty (8703.9090)
• Other types of used vehicles – 60% duty (8703.9090)

Note: The above listed regulatory duties are not applicable on electric hybrid vehicles.

In April, the government increased the customs valuations rate of imported vehicles with engine displacements of 1,800cc and above which could raise the price of such vehicles by Rs. 200,000 to Rs. 1.5 million. All Pakistan Motor Dealers Association (APMDA) is already protesting against the increased customs valuations rate on imported vehicles.

With the higher regulatory duty, imported vehicles will get more expensive, leaving car buyers with no other option but to pay high premiums on low quality local vehicles with months of delay in delivery.

A similar increase in duties has been announced for tobacco products, ceramics, firearms and bathroom equipment.

The SRO notification can be viewed here.