In a bid to curb the escalating import bill and foreign exchange outflow, the Federal Board of Revenue (FBR) unveiled a significant surge in regulatory duty on the import of new motor vehicles.
The announcement, made through SRO 157(I)/2022, indicates a sharp increase from the existing 15% to 50% on regulatory duty for various categories of motor vehicles.
The enhanced regulatory duty is specifically targeted at imported new 4X4 vehicles in completely built units (CBU), new mini-vans, and new vehicles with engine capacities exceeding 1,000CC. The move is part of the FBR’s broader strategy to discourage the import of non-essential and luxury items, aligning with the measures previously introduced through SRO 840(I)/2021 on June 30, 2021.
The regulatory duty adjustment is set to remain in effect until June 30, 2022, aiming to provide a temporary boost to the nation’s economic stability. The FBR’s decision to intensify regulatory duty on certain vehicle categories is a response to the rising import bill and the continuous outflow of foreign exchange.
Notably, the FBR has also imposed a 10% regulatory duty on the import of electric vehicles in CBU condition, equipped with more than a 50KWH battery pack, excluding commercial buses and trucks. This particular regulatory duty will also be applicable until June 30, 2022.
FBR sources underscored that the primary objective behind these measures is to discourage the import of luxury vehicles, which contribute significantly to the outflow of foreign exchange. The move aligns with the government’s broader economic strategy to address the trade imbalance and reduce reliance on imported luxury goods.
These regulatory duty adjustments are expected to have a dual impact by not only curtailing the import bill but also encouraging the adoption of more sustainable and eco-friendly transportation options. As the world transitions towards greener alternatives, the imposition of regulatory duty on non-essential and luxury vehicles aligns with global efforts to promote environmentally conscious practices.
While the FBR’s decision is poised to generate revenues and reduce the trade deficit, it also raises discussions about the potential impact on the automotive industry and consumer behavior. The government’s focus on economic stability and the balance of trade will likely drive further policy adjustments in the future as it navigates the challenges posed by the evolving global economic landscape.
