The proposed budget doubles the advance income tax on automotive imports. In addition, the government intends to levy a withholding tax on car purchase proceeds rather than engine capacity.
In addition, the new budget proposes an increase in the regulatory extra customs duty (ACD) on imported cars. According to a media source citing official papers, the goal for domestic exports in the current budget is $30 billion, while imports are set at $58.70 billion.
According to the documents, the trade deficit for the coming fiscal year would be $28.70 billion. The current account deficit is expected to reach $6 billion, according to the records.
Objections from the Automakers
The Pakistan Automotive Manufacturers Association (PAMA) has warned of the adverse effects of tax increases.
PAMA cautioned the Chairman of the Federal Board of Revenue (FBR) in a letter that altering the foundation of WHT could negatively impact sales of locally manufactured automobiles.
Pak Suzuki Motor Company (PSMC) has written a letter directly to Pakistan’s interim Prime Minister, Mian Shahbaz Sharif, demanding that the aforementioned proposal not be approved.
The company stated that the local auto sector is experiencing “the worst of times,” with multiple carmakers “on the brink of closure.” The government has failed to reply to these requests for help.
