Estimated Price Hike For Imported Cars After New Fixed Tax
Finance Bill 2023 is the talk of the town especially in the auto industry as Finance Minister Ishaq Dar announced a new tax for cars over 2001cc. In his speech in the National Assembly, the minister shared some new taxes to increase the overall tax net of the country under the directions of International Monetary Fund (IMF). According to details, these are three points of New Fixed Tax:
- 6% tax will be imposed on the value of vehicles with engine capacities from 2001cc to 2500cc.
- Vehicles with engine capacities from 2501cc to 3000cc will face an 8% tax based on their value.
- Vehicles with engine capacities exceeding 3000cc will be subject to a 10% tax based on their value.
Moreover, the tax will be implemented by following practices:
- The Customs department will evaluate the import value of cars with engine capacities exceeding 2001cc. This import value will be used to determine the applicable Customs Duty, Federal Excise Duty (FED), and Sales tax.
- For both Completely Built-up (CBU) and locally assembled cars with engine capacities above 2001cc, the invoice value, which includes all duties and taxes, will be taken into consideration.
- In situations where the engine capacity is not relevant, and the value of vehicles is Rs. 5 million or higher, a tax rate of 3% will be imposed on the import value (including the revised Customs Duty, FED, and Sales tax for imported vehicles) or the invoice value (for locally assembled vehicles).
- If a locally manufactured vehicle is sold by the original purchaser before registration, the motor vehicle registering authority will levy taxes at the specified rates during the registration process.
- Also, manufacturers of motor vehicles are required to collect advance taxes from buyers at the specified rate during the sale of motor cars or jeeps.
Expected Price Hike for Imported Cars
In our other blog, we shared the details of expected jump in prices of locally assembled cars and you can read about it here. In the following table, we are sharing the expected jump in prices of imported cars post imposition of New Fixed Tax.
As we mentioned in the other article, these are our calculations and there could be changes after official announcement from the car companies.