The government is doubling down on curbing the sales and purchases of ‘luxury’ cars in Pakistan. Along with a 100 percent increase in advance tax for non-filers on the purchase of cars above 1,600cc, the government has also imposed new taxes on cars with big price tags.
According to the budget document, car buyers will pay 2 percent of the car’s value as capital value tax. This rate only applies to cars that cost over Rs. 5 million. This way, the government has managed to bring cars with small turbocharged engines but big price tags under the tax net.
Some popular cars that are affected by this tax include Changan Oshan X7, Peugeot 2008, Honda Civic, DFSK Glory 580 Pro, Proton X70, Haval Jolion, and H6, among others. The demand for crossover SUVs has been on the rise in Pakistan as of late. However, some of these new taxes are likely to impact their sales negatively.
The government’s rationale behind these taxes is to confine people to necessity-based buying patterns in order to preserve the economy, however, time will tell if this tactic is fruitful.