Customs clearance of cars halts over bank certificate requirement

KARACHI: Customs clearance of new and old cars has halted after the Ministry of Commerce amended the Import Policy Order 2016, and made it mandatory to pay duty and taxes through foreign exchange, sources said on Tuesday.

The Ministry of Commerce on December 4, 2017 issued a statutory regulatory order (SRO) and amended the policy regarding the import of new and used cars/vehicles under transfer of residence scheme, making it mandatory to pay duty and taxes in foreign exchange.

The sources said customs authorities had approached the ministry apprising that the condition of duty and tax payment through bank certificate was already applicable.

Therefore, this condition should also be applied on transfer of residence scheme.

An official at Pakistan Customs said the government allowed this facility to expatriate Pakistanis, who spent 180 days abroad, for importing one car/vehicle under transfer of residence scheme on verification of their passport.

The official said this facility was grossly misused and under this head import

bill was increased significantly during the current fiscal year.

According to Pakistan Bureau of Statistics (PBS), the import of motor cars in Completely Built Unit (CBU) condition has registered growth of 71 percent to $234.8 million during July-November 2017 as compared with $137.63 million in the corresponding period of the last year.

The customs official said after change in the import policy order now the person clearing motor car was required to provide bank certificate with assurance that the amount for payment of duty and taxes was foreign inflows.

“Since the application of amended import policy the clearance of cars is almost halted,” the official said.

The customs authorities were collecting around Rs60-70 billion annually or Rs5-6 billion monthly from clearance of cars.

According to customs authorities, the quantum of duty and taxes on an imported car is almost 100 percent on the declared import price.

Karachi Customs Agents Association (KCAA) approached the ministry of commerce and customs authorities and apprised that due to the amendment to the import policy order, the clearance of cars under transfer of residence had almost stopped.

Faisal Mushtaq, president, Karachi Customs Agents Association said due to the changes, the outward remittances would increase and payment would be made through local resources after sending it abroad.

The association proposed that a person, who brought a vehicle, which was not cleared due to various reasons, should be allowed to transfer the ownership to a car dealer/ showroom for subsequent clearance.