The federal government has reduced import duties on cars up to five-year old by two per cent, citing wear and tear of vehicles as the reason.
The move comes as part of a bid to crack down on rising prices of locally assembled cars, and follows the increase in the imported car age limit from three years to five years. The Federal Board of Revenue has notified new depreciation rates, but the Statutory Regulatory Order (SRO) has added that only 60 per cent of the depreciation value can be availed.
After new amendments, the value of assessment of used cars would be decreased by 10 per cent, as the effective depreciation rate will become 60 per cent.
Moreover, the depreciation is only for Asian made vehicles, as the new SRO is an amendment to the 2005 SRO, which focuses only on Asian made cars.
For cars up to 800cc, total payable duty is $4400 and the importer can claim up to two per cent of the duties on account of wear and tear. For cars up to 1000cc cars, the duty rate is $5500. For cars up to 1300cc, importers must pay $11000 in taxes, but can claim two per cent of it on account of aging.
For cars up to 1500cc cars, duty will be $15400, cars up to 1600cc, the duty rate is $18700, while for cars up to 1800cc, duty will be $23100. Under the gift, baggage and transfer of residence schemes, cars with engine displacement of over 1800cc cannot be imported.
Published in The Express Tribune, March 30th, 2011.