KARACHI: Pakistan has re-introduced capital value tax (CVT) at one per cent of the value of motor vehicle on locally manufactured as well as on imported vehicles.
According to interpretation of Finance Act, 2022 by PwC A. F Ferguson & Co. through section 7 of the Finance Act 1989, CVT was imposed on transfer of immovable properties, modaraba certificates, listed shares and motor vehicles.
The CVT was withdrawn gradually and with effect from April 19, 2020 CVT was abolished on all the assets.
The Finance Act, 2022 has now again enacted CVT in respect of various assets, including motor vehicles.
The CVT is chargeable from July 01, 2022.
The federal government imposed CVT at 1 per cent of the value of motor vehicle held in Pakistan where the engine capacity exceeds 1300CC or in case of electric vehicles, the battery power capacity exceeds 50kwh.
The collector of customs shall collect CVT when vehicles are imported in Pakistan, the import value assessed by the customs authorities as increased by duties and taxes leviable at import stage.
Similarly local manufacturer or assembler shall collect CVT at the time of sale (in case of sale on installment, the CVT shall be collected at the time of payment of first installment) in case where the vehicle is manufactured or assembled locally in Pakistan, the ex-factory price inclusive of all duties and taxes.
Furthermore, any person making sale by public auction or auction by tender shall collect CVT (in case of sale on installment, the CVT shall be collected at the time of payment of first installment) where the vehicle is auctioned, the auction price inclusive of all duties and taxes.