KARACHI: The automotive manufacturers, giving their budget proposals, have urged the finance ministry to remove tariff anomalies for economic growth.
The Pakistan Automotive Manufacturers Association (PAMA) said that unfair advantages being given to used car importers which are inflicting a heavy damage on not only local industry but national exchequer as well which is facing heavy losses due to rampant under invoicing and misuse of used car import policies.
The association pointed out that under SRO 577(I)/2005, duties and taxes rates were fixed in dollars way back in year 2005 and except once in 2008 were not appropriately revised, whereas, ever since prices of used vehicles have increased substantially. The fixed duties under SRO 577 are substantially lower than duties under the normal regime, it said.
The PAMA said that SRO 577 (I)/2005 was indeed an oddity not permitted by law and has been a cause of substantial loss in revenues and although so pointed out, yet no action was taken so far. If SRO cannot be abolished completely, it may be updated to bring fixed amount of duty and taxes at par with reality of the time, it added.
The proposal said under SRO 499 (I)/2013, Hybrid vehicles were allowed to be imported at concessionary rate of duties and taxes in Complete Built-up Unit (CBU) condition only. PAMA proposes existing concession to CBUs be likewise extended to imports of auto parts and Complete Knock Down (CKD) kits enabling local production of similar Hybrid vehicles.
This concession will lead to introduce locally manufactured Hybrid vehicle in Pakistan, which will reduce import bill as CBU Hybrid vehicles costs considerably higher than their CKDs.
Also it will generate employment at Original Equipment Manufacturers (OEMs) and Vendors as many parts of Hybrid vehicles can also be localised. SRO 499(1)/2013 June 12, 2013 provided relief from Customs duty, sales tax and income tax only on import of Hybrid Electric Vehicles.
Local sale of these vehicles by a registered person is subject to sales tax at normal rate i.e 17 percent. There is, therefore a discrimination import by an unregistered dealer will be cheaper than import and local sale by OEMs, which would attract local sales tax, as aforesaid. The SRO 499(I)/ 2013 should be amended to allow relief of sales tax on both import stage as well as on local supplies.
Under invoicing from China is now a common knowledge, PAMA proposal suggested to fix minimum duty on Chinese vehicles in consultation with local industry and OEMs operating in China. This would provide level playing field to industry and increase government revenues, the proposal added.
To promote localisation, increase revenue of government and have fair competition, under-invoicing needs to be curbed strongly. The incorrect declaration of value by un-organised sector results in unhealthy competition.
