Govt Can’t Ban CBU Imports, Planning to Increase Taxes
Almost a week back, Pakistan’s Finance Minister, Mr Shaukat Tarin, told the media that the government is banning the import of CBU vehicles for six to nine months to control the Account Deficit. His statement left us with many questions. Which CBU imports? New or used? Petrol, electric, or all vehicles? For car companies, private buyers, or everyone?
As per a new media report, the government has abandoned the proposal to ban the import of CBU (Completely Built-Up) vehicles. Instead, the authorities are planning to impose heavy taxes on the CBU imports to control the increasing import bill. This time, we have more details than the last time.
A senior official at the Ministry of Industries and Production told a leading newspaper that, under the World Trade Organization (WTO) regime, the government of Pakistan cannot ban imports. The ministry has pitched a proposal to the Tariff Policy Board for approval.
Import of EVs
The Ministry of Industries and Production has proposed to impose a 50% regulatory duty on the import of electric vehicles with over 50 kWh battery pack.
The ministry says that the government reduced the customs duty on the import of electric vehicles from 25% to 10% in the EV policy. This was to promote the local production of EVs, but the import of high-end EVs is now hurting the country’s import bill and account deficit. Now, the government has no choice but to increase the taxes to settle the matter.
Import of Hybrid Vehicles
In the same proposal, the ministry has suggested to increase the regulatory duty from 15% to 50% on import of 1501cc to 1800cc Hybrid Vehicles.
Import of Fuel-Powered CBUs
The ministry has also proposed to increase the regulatory duty on the import of normal gasoline vehicles up to 50%. (No engine displacement specified)
Taxes on CKD Cars
In addition to increasing taxes on imported CBUs, the ministry has also proposed to increase the existing 5% Federal Excise Duty (FED) to 10% on locally manufactured cars and SUVs from 1501 cc and above.
As per the ministry official, the proposal is under consideration by the Tariff Policy Board. Once approved, it will be forwarded to PM Imran for the final say.
Let’s see what the government decides to do about the taxes on CBU and CKD vehicles. Whatever that is, we hope they formulate a proper policy rather than passing statements and submitting more proposals.