Value-added charge implemented on locally-manufactured vehicles

LAHORE: The federal government has implemented a new value-added charge on all vehicles manufactured or imported in the country, said sources.

They said the charge will vary based on the vehicle’s engine capacity, type, and origin with the aim of increasing revenue, protecting the local industry, and controlling imports. Besides, this new levy is introduced to incentivize the transition from traditional petrol/diesel vehicles to electric vehicles, thus reducing reliance on conventional automobiles and promoting environmental-friendly transportation

The charge will be applied as follows: one percent for vehicles with an engine capacity of up to 1300cc, two percent for vehicles with an engine capacity between 1300cc to 1800cc, and three percent for vehicles with an engine capacity above 1800cc. The charge will be levied on the invoice price for locally manufactured vehicles and the customs-assessed value for imported vehicles, both inclusive of duties and taxes.

Additionally, they added, the government has decided to impose a one percent value-added charge on buses and trucks, both locally manufactured and imported. This charge will be applied to the invoice price for locally manufactured vehicles and the customs-assessed value for imported vehicles, both inclusive of duties and taxes.

The decision is expected to generate additional revenue for the government, but may also lead to an increase in vehicle prices and affect demand, particularly in the imported vehicle segment.

Local auto industry representatives have welcomed the decision, citing it as beneficial for the domestic industry, while imported vehicle dealers have expressed concerns about price increases and potential decline in demand.

The levy is applied to the invoice price (including duties and taxes) for locally manufactured vehicles and the assessed value for imported vehicles. It is expected to increase the cost of traditional vehicles, potentially making electric vehicles more appealing to consumers.

The government has also removed concessions on imported luxury electric cars and local manufacturing of hybrid vehicles, further encouraging the adoption of electric vehicles.

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