The Economic Coordination Committee (ECC) of the Cabinet has given the green light to a proposal by the Federal Board of Revenue to raise the sales tax rate on locally manufactured or assembled vehicles.
This decision was made during a meeting chaired by Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar. Other ministers present at the meeting included Fawad Hasan Fawad, Gohar Ejaz, Mohammad Ali, Sami Saeed, and Shahid Ashraf Tarar.
The proposal, which aimed to rationalize the criteria for an enhanced 25% sales tax rate on locally manufactured/assembled vehicles, was thoroughly discussed and eventually approved by the ECC.
This move is expected to result in further increases in the prices of locally manufactured vehicles, which have already seen a decline in sales during the first seven months of the fiscal year 2023-24.
The decision specifically affects vehicles falling under the Pakistan Customs Tariff Code 87.03, which includes “motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars.” According to a social media user, this decision is likely to impact vehicles with engine capacities above 1000cc, as they were previously subject to an 18% tax rate.
Models such as Honda City, Civic, Toyota Yaris, and Toyota Corolla are expected to see price hikes once the new criteria are officially approved by the federal government.
