Tax up to 500% on imported cars to protect domestic industry

Tax Up to 500% On Imported Cars to Protect Domestic Industry

Tax up to 500% on imported cars to protect domestic industry

Pakistan has increased tariffs and protective taxes by up to 500% to demoralize the flow of imported cars, which it believes makes local manufacturers less competitive while promoting their monopoly.

The meeting, chaired by committee chairman MNA Noor Alam Khan, strongly recommended a review of the unfair safeguards that actually give these companies the ability to defraud buyers.

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Protectionism refers to the government’s economic policies that restrict international trade to make it easier for domestic industries to go out of business with cheap imports.

These policies are usually implemented to increase business activity in the local economy, but can also be applied for safety or quality reasons.

Khan said the auto industry had continued to raise prices since the last committee meeting. “It’s not the automaker, it’s the assemblers,” he said.

He recommended that the government remove “manufacturer” status instead of labeling (and treating) them as “assemblers” – a directive that, if passed into law, would help reduce the level of protection afforded builders currently enjoy.

“If we can lower the tariff on imports of old vehicles and if the tariff protection is lowered from 500% to 400%, even then we can still make big profits,” said PAC member Saleem Mandviwalla.

The PAC chairman said customers who paid 100% in advance should no longer be affected by the increase in car prices. He said automakers would pay a tariff of 10% instead of 35% if they imported the engine in three parts.

“Is it true that the CKD kit is made in three parts to save tax,” he asked. The FBR official replied that this would not be decided by the FBR but by the Technical Development Agency.

Strict orders issued from PAC to Carmakers

Local assemblers enjoy 241% to 500% protection, said Mujtaba Memon, special secretary for trade. “Before the recent imposition of additional tariffs, the level of protection ranged from 100% to 390%,” he said.

The PAC directs the Ministry of Industry and Trade to review safeguards and develop policies within one month to address the issue. It also led them to introduce lower federal consumption tax rates than those applied to imported cars.

The committee instructed the automaker to deliver the vehicle within one month to customers who paid 100% in advance.

The secretary of the Ministry of Industry and Production told PAC that automakers are taking progress from 20% to 100% while none of the factories are operating at 100% capacity.

The secretary told the committee that the car had to be delivered within 60 days of ordering and if the company failed to do so, they would be charged a 3% KIBOR fee.

The committee said car companies should not ask for a deposit of more than 20% down for an order, and if the car is not delivered within 60 days despite the 20% down payment, they will have to pay 3% KIBOR interest after 30 days.

Khan said automakers continued to raise prices after the committee’s last meeting. “It’s not the automaker, it’s the assemblers” he said.

Tax up to 500% on imported cars to protect domestic industry