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Tuesday March 19, 2024

ECC ties car imports to duty payment in foreign currency

By Mehtab Haider
January 16, 2019

ISLAMABAD: Economic Coordination Committee (ECC) of the Cabinet on Tuesday allowed the import of all new/old vehicles under transfer of residence, personal baggage or gift scheme, only if the duty and taxes are paid in foreign exchange by Pakistani nationals by themselves.

With this condition, the new or used vehicles could be imported through foreign exchange arranged by Pakistan nationals themselves or local recipients, supported by bank encashment certificates, showing conversion of foreign remittance to local currency.

The ECC met here under the chair of Finance Minister Asad Umar to review the state of economy of the country.

According to the summary tabled by Ministry of Commerce before the ECC stating that under the Import Policy Order 2016 the import of used cars was allowed to overseas Pakistanis under personal baggage, transfer of residence and gift schemes in accordance with the laid down procedures.

However, there were frequent complaints that these schemes were misused by the commercial importers for massive import of used vehicles. In order to contain the misuse of these schemes, the ECC in its meeting held on October 6, 2017 considered the summary by the Commerce Division on Import Rationalization policy.

The decision of the ECC was notified by the Commerce Division on October 20, 2017. The effect of the above decision led to effective restriction in imports of used vehicles which released the pressure on the kerb market as well.

As a result of the decision around 6000 vehicles got stranded at the seaport, causing commercial car importers to raise hue and cry.

Subsequently, on the recommendation of the then advisor to the Prime Minister on finance, revenues and economic affairs, the Commerce Division moved another summary with the proposal that the new requirements be given effect for the vehicle arriving after February 28, 2018. Later, in order to prevent misuse of the schemes and restrict the imports under these schemes to bona fide overseas Pakistanis, the ECC approved certain amendments into import policy with additional conditions.

According to the official statement issued after the ECC meeting, the meeting discussed and approved proposal of Ministry of Commerce & Textile relating to payment of duty and taxes on all imported vehicles in new/used condition under personal baggage or gift scheme, through foreign exchange arranged by Pakistan Nationals themselves or local recipient supported by bank encashment certificate showing conversion of foreign remittance to local currency.

The ECC also approved regulatory amendments in the Export Policy Order 2016 and Import Policy Order 2016 as proposed by Commerce Division.

These will be submitted for consideration of the Federal Cabinet. The amendments are aimed at enhancing ease of doing business in the country.

The committee in consideration of the proposal submitted by the Ministry of Commerce & Textile, accorded approval for withdrawal of customs duty, additional customs duty and sales tax on import of cotton effective from February 1, 2019 to June 30, 2019. The step is aimed at ensuring sufficient supply of cotton for the textile industry, especially its export segment.

The ECC discussed and approved another proposal from Ministry of Commerce and Textile to clear outstanding claims of drawback of local taxes and levies (DLTL) under the exports incentive scheme announced by the government in Finance Act 2014-15.

The ECC decided that cases which were submitted in time but have been pending due to want of funds will be entertained by the government.