Auto policy change likely to cause import duty losses

TOKYO: Government is likely to face Rs70 billion in customs duty losses after a sudden change in auto policy that bounds overseas Pakistanis to pay levies on car exports to Pakistan in US dollars, industry officials said. 

Presidents of the Pak Japan Auto Association Javed Nazi and Pak Japan Business Council Rana Abid Hussain told The News that the Pakistani government allows import of used vehicles under personal baggage, transfer of residency and gift scheme. 

Pakistanis send quality vehicles into the country, which are eco-friendly in terms of carbon emission and fuel efficiency, they added. Ministry of commerce, however, brought a change, through a statutory regulatory order, into Auto Development Policy 2016 that lays down parameters for import of used cars under the schemes. 

Now, the government demands evidence for the transfer of dollars by overseas Pakistanis on account of custom duties.  A large number of overseas Pakistanis export vehicles from foreign countries, but their families living in Pakistan mostly pay duties on these vehicles. Even, most of them receive remittance in rupees and not all of them have dollar accounts.

A Karachi-based used car dealer said an overseas Pakistani has to send an encashment certificate to prove duty payment.   “The policy change causes 15,000 to 20,000 booked cars stuck on foreign ports,” HM Shahzad, chairman of All Pakistan Motor Dealers Association (APMDA) said. 

“We requested the government to extend the policy change implementation to January next year,” he added. Pakistan imports 65,000 to 70,000 used cars and pay Rs70 in duties.  

Shahzad said there has to be a mechanism to receive duties in dollars as currently even Pakistan Customs doesn’t have a system in place to determine and receive taxes in foreign currency. 

APMDA chairman said commerce secretary promised him to pay heed to the dealers’ proposals.  “The policy may be implemented with consensus of all stakeholders, most importantly the overseas Pakistanis who should be suitably facilitated,” he said in a letter secretary commerce.  “The effective date for implementation may be fixed at 31 December 2017 so that all consignments in the pipeline are cleared. Until then the current policies may be continued.”