ISLAMABAD: While approving the newly drafted Auto Industry Development and Export Policy (AIDEP) 2021-26, the Federal Government has made it clear that export targets are indicative which will be reviewed and enhanced periodically.
According to official documents presented before the Federal Cabinet on December 21, 2021, Original Equipment Manufacturers (OEMs)/ vehicle manufacturer shall be facilitated for local manufacturing of left-hand vehicles for export purpose only. The new product policy will be extended up to 1000CC instead of 850 CC vehicles.
The government has urged that utmost efforts be made to shift to a general tariff regime after the end of AIDEP 2021-26 whereas localization shall be targeted to attain maximum possible value addition within Pakistan.
The incentives approved for vans & Light Commercial Vehicles (LCVs) up to 1000 cc (Meri Garri Scheme) are as follows: (i) all taxes removed (ACD0%), AST(0%), WHT(0%) &; FED(0%), ST reduced to 12.5%) on locally manufactured cars ;(ii) reduction in taxes on CBUs (ACD 0%); and (iii) new product policy CD (15-30%) +ST @12.5% will be applicable to new models of all existing and new entrants for vehicles up to 1000cc.
New Product Policy CD (15-30%) will be for three years from manufacturing certificate or June 30, 2026, whichever is earlier – cut-off date of approval June 30, 2023.
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Bringing prices of locally manufactured cars down (above 1000 cc) reduction of FED (by 2.5 percent on each category of cars/ SUVs/ LCVs) has been approved, i.e., from 1001-2000cc 5% to 2.5%, up to 1000cc 2.5% to 0% and above 2000cc-7.5% to 5%.
For agricultural tractors of new make or new model as certified by EDB, the custom duty on localized parts will be 15% (20 % advantage) for three years from date of manufacturing certificate or up to June 30, 2026.
For motorcycles exceeding 125 cc, motorcycle rickshaws and auto rickshaws exceeding 200 cc as certified by EDB, the Custom Duty on localized parts will be 30% (reduced by 16%) for three years from the date of issuance of manufacturing certificate or up to June 30, 2026 whichever is earlier, whereas non-localized parts attract CD @ 15% and cut-off date for issuance of manufacturing certificate is June 30, 2023.
Taxes amounting to Rs 50,000/- Rs 100,000/- and Rs 200,000/- for different CCs of vehicles on registration, where booking is made by one person and registration is made in name of another person. Compulsory payment of KIBOR+3% interest by manufacturers on delivery beyond 60 days on initial deposited amount.
Incentives for EVs are as follows: (i) Customs Duty (CD) on Specific Parts for electric vehicles @ 1 % ;(ii) reduction of sales tax on locally manufactured EVs having battery pack below 50 KWH to 1% from 17 %;(iii) import of EV CBU @ 10% CD for one year instead of 25 % and;(iv) Incentives for EV specific parts on motorcycles (CD 1%), 3 wheelers and heavy commercial vehicles.
Copyright Business Recorder, 2021
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