The Pakistan Automotive Manufacturers Association (PAMA) has proposed to the ministry of finance to take remedial measures for providing level playing field to the auto industry. According to the budget proposals for 2015-16, PAMA’s prime focus is on unfair advantages being given to the used car importers inflicting heavy damage not only to the local industry but the exchequer also, due to under-invoicing and misuse of used car import policies.

It said that under SRO 577(I)/2005, duties and taxes rates, which were fixed in US dollars in 2005 and except once in 2008, were not appropriately revised and the prices of used vehicles had increased substantially. “The fixed duties under SRO 577 are substantially lower than the duties under the normal regime,” the proposal said.

It said that SRO 499 (I)/2013 allowed the import of hybrid vehicles at concessionary rate of duties and taxes in CBU condition only. Therefore, PAMA proposed the existing concession to CBUs be likewise extended to imports of auto parts and CKD kits enabling local production of similar hybrid vehicles.

It further said this concession would help introduce locally manufactured hybrid vehicle in Pakistan which would not only reduce the import bill but also generate employment.  The proposal said that SRO 499(1)/2013 provided tax relief only on import of Hybrid Electric Vehicles while local sale of the vehicles was subject to sales tax at normal rate, ie, 17 percent. Therefore, both SROs should be amended in consultation with auto industry. It said that the import of auto parts on weight basis prescribed under column 4 of the First Schedule to the Customs Act 1969 encouraged under-invoicing of value added auto parts.

“This is a distortion that items like bumpers and radiators are being assessed on per kg basis besides a large number of other value added items. Such method of assessment is farce and the delinquents thrive on the same while it beats genuine businesses.”  It said that change in UoM as unit (u) would ensure proper assessment of auto parts and curb the menace of under invoicing, which would not only lead to increase revenue but also enable authorities for ad-valorem assessment of high value added items. However, the existing system promotes incorrect declaration of value by the unorganised sector, causing to support unhealthy competition.

The proposal said that certain categories of steel materials (Sheets) which were not manufactured locally, were inadvertently been included in SRO 568(1)/2014 and added that Regulatory Duty was also imposed on steel products under SRO 131(I)/2015 and SRO 246(I)/2015. PAMA further recommended the ministry to issue valuation rulings after formal and documented consultation with genuine stakeholders like PAMA, PAAPAM & EDB to enable authorities to ad-valorem assessment of high value added items and reduce the impact of undervalued imports.  PAMA proposed to include imports made under SRO 655(I)/2006 as exempt from regulatory duty under SRO 568(I)/2014 as such exemption had also been given to other sectors such as imports covered under 678(I)/2004.