KARACHI: The upcoming budget proposes doubling the advance income tax on automobile imports. Also, the government of Pakistan plans to impose a withholding tax on purchase receipts of vehicles rather than their engine capacity.
The latest budget has proposed an increase in the regulatory additional customs duty (ACD) on imported cars. Citing official documents, a media report states that the benchmark for domestic exports has been set at 30 billion dollars in the new budget, while 58.70 billion dollars has been set for imports.
The documents indicate that the trade deficit for the following fiscal year will be 28.70 billion dollars. According to the documents, the current account deficit is estimated to be 6 billion dollars.
Objections from the Automakers
Pakistan Automotive Manufacturers Association (PAMA) has warned of the detrimental consequences as a result of tax increments.
In a letter to the Chairman Federal Board of Revenue (FBR), PAMA has warned that changing the basis of WHT would negatively impact the sales of locally-made vehicles.
Pakistan Suzuki Motor Company (PSMC) sent a letter directly to the Prime Minister of Pakistan, Mian Shahbaz Sharif, requesting him not to approve the aforementioned plan.
The company highlighted that the local vehicle industry is going through “the worst of times” with numerous automakers “on the brink of closure.” The government is yet to respond to these distress calls.
