Pakistan Approves New Auto Policy For Next Five Years

Pakistan Approves New Auto Policy For Next Five Years. In the hope of attracting a European carmaker, the government on Friday approved a new automobile policy, which offers tax incentives to new entrants to help them establish manufacturing units and compete effectively with the three well-entrenched assemblers.

The new automobile policy will offer tax incentives to support new eBantrants  establish manufacturing units in Pakistan and effectively compete with the existing three assemblers, who are operating since the early 90s.

Basic aim of the policy is to enhance consumer welfare by boosting competition and to attract new car makers.   The government desires that Fiat, Audi or Volkswagen should establish its plant in Pakistan, which is a positive initiative by Government of Pakistan.

A major incentive for the new investors is reduced 10% customs duty on non-localized parts for five years against the current 32.5%. For investors, the duty will be slashed by 2.5% to just 30% from the new fiscal year of 2016-17.

Beginning from July, the localized parts can be imported by the new entrants at 25% duty compared to the current 50% for five years. For existing players, the duty on import of localized parts will be brought down to 45% from the new fiscal year.

The government has allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility. It has also permitted import of 100 vehicles of the same variants in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after the groundbreaking of the project.

Another important point is in the CBU category, customs duty on cars up to 1,800cc engine capacity has been reduced by 10% for two years – 2017-18 and 2018-19. This will be applicable to the existing players as well and will encourage reduction in car prices. Also a single duty rate will be applied to the localized and non-localized parts after 5 years of the new policy. The present duty structure will continue for 7 years for the new investors.

For revival of sick or non-operational units, the non-localized parts can be imported at 10% and localized parts at 25% duty for three years for the revival of a sick unit. The government however, did not change its policy for used car imports, leaving consumers with a limited range of choice until new brands of good quality are produced in the domestic market.

Possible manufacturers that might enter our market are Audi, Volkswagen, Fiat, Renault, Nissan, Hyundai, Kia, while Zotye, JAC, Changan, Geely and Chery among the Chinese.

All above are just for information and same must never be considered as legal advice by the Law Firm or any Lawyer or any approved policy of the government.

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