Customs Authorities Confused on How to Tax Fully Electric Cars

Customs authorities are seeking guidance of Federal Board of Revenue (FBR) about giving concessions on duties and taxes for the import of environment-friendly ‘electric vehicles’ (EV), as applicable in case of ‘hybrid electric vehicle’ under SRO 499(1)/2013, dated 12/6/2013.

Sources revealed that FBR is examining the issue in light of practice in field formations and is expected to issue a clarification after completion of the exercise.

The Board has raised a question on whether a complete electric vehicle is entitled for benefit/concession of duties and taxes available to electric hybrid vehicles in terms of SRO 499(I)/2013.

According to a communication from Jamil Nasir Khan (Collector Model Customs Collectorate (Appraisement) Dry port Lahore) to the FBR, facts of the case in brief are that one Mian Ahmad Irfan s/o Muhammad Noorullah imported an ‘electric vehicle’ (EV) of model 2016 bearing chassis # 5YJSB7E21GF137160 under gift scheme and filed GD # 792 dated 24.10.2017 through Sanasu Traders, Customs Clearing Agent.

As per examination report, the imported vehicle is a “used Tesla fully Electric Car S70 Fuel Electrically 193 kw, Model 2016, Duel Motor, 04 Wheel Drive” with standard accessories.

At the time of assessment, the importer contended that the vehicle is entitled to benefit/concession of duty and taxes available to the “hybrid electric vehicle” on the analogy that both types of vehicles are environment-friendly and that the electric vehicle imported by him is far better, from the perspective of environment, compared to fossil fuel vehicles and hybrid electric vehicles.

It generates no pollution and noise. The importer further contended that the vehicle squarely falls under ‘hybrid electric vehicle’ (HEV) in terms of SRO 499(1)/2013 dated 12/6/2013, according to the Collector’s letter.

Since no evidential record/data of such vehicles is available, the importer’s request for a provisional assessment was acceded to.

The said vehicle was assessed under PCT 7803.8090, attracting customs duty 50%, sales tax 17%, withholding tax 9%, and additional customs duty 1%. He further contended that since no cubic capacity of the vehicle is available, therefore federal excise duty @ 10% is also not attracted in this case.

Out of the total amount of duties and taxes of Rs 6,616,113, the differential amount of duty and taxes including FED (Rs. 3,867,811), has been secured in the shape of a pay order. Against this backdrop, the Board’s guidance is solicited on the following specific question,

Is a complete electric vehicle covered under ‘hybrid electric vehicle’ in terms of SRO 499(I)/2013 dated 12/6/2013 and entitled for benefit/concession of duly and taxes available to electric hybrid vehicles?