Regulatory Duty on Motor Vehicle Import Increased to 100%

Government has increased the regulatory duty (RD) and additional customs duty (ACD) on the import of motor vehicles (CBU) into the country. The Federal Board of Revenue (FBR) issued SRO 1571(I)/2022 to increase the rate of regulatory duty from 90% to 100% on import of CBU vehicles in the country.

Previously, the government on May 19, 2022 had imposed a ban on import of CBU vehicles in order to support the balance of payment and prevent losses in rupee value. However, on August 20, 2022 the government on the pressure of the International Monetary Fund (IMF) & western trading countries decided to lift the ban. In order to apply the new rate of regulatory duty the FBR through instant notification amended the SRO 966(I)/2022 issued on June 30, 2022. The increased regulatory duty has been imposed on imported CBU vehicles including mini vans, 4X4s, SUVs and vehicles of a cylinder capacity between 1,000cc and 1,300cc.

The regulatory duty on import of motor vehicles has been enhanced in the wake of high outflow of foreign exchange reserves. Finance Minister Miftah Ismail has already indicated the levy of regulatory duty for curbing the import of luxury and non-essential items. Miftah, in a press conference about lifting the import ban last week, said that after the imposition of RDs, if a person wants to import a car for Rs 300-400 million, which is originally worth Rs 60 million, they can — indicating that the government did not have plans to increase imports at this time.

The increased rates of RDs would remain applicable from August 22, 2022, to February 21, 2023, the FBR notification said.

RD Vehicle
15%-100% 4×4 vehicles Completely Built Up (CBU)
15%-100% New minivans (CBU)
70%-100% All-terrain vehicles (4×4)
15%-100% Sport utility vehicles/SUVs (4×4)
5%-100% Vehicle cylinder capacity exceeding 10,00cc but not more than 1,300cc
ACD Vehicle
35% Sport utility vehicles/SUVs (4×4)

“We are expecting import compression of 60-70%, and it will bring additional revenues to the tune of Rs15 billion on a per annum basis,” FBR chairman Asim Ahmed told.

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