The Economic Coordination Committee (ECC) of the Cabinet has approved a proposal from the Federal Board of Revenue to increase the sales tax rate on vehicles made or assembled locally.
At a meeting chaired by Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar, it was decided to raise the sales tax rate on cars made or put together locally. Others present at the meeting included ministers like Fawad Hasan Fawad, Gohar Ejaz, Mohammad Ali, Sami Saeed, and Shahid Ashraf Tarar.
The ECC thoroughly discussed and ultimately approved the proposal to standardize the criteria for implementing a higher 25% sales tax rate on locally manufactured or assembled vehicles.
The expected result of this action is that the prices of cars made in the country will likely go up. These cars have already seen fewer sales in the first seven months of the fiscal year 2023-24.
The decision particularly targets vehicles categorized under Pakistan Customs Tariff Code 87.03, encompassing “motor cars and other motor vehicles primarily designed for passenger transport, including station wagons and racing cars.”
According to a post on social media, this decision is expected to impact cars with engines bigger than 1000 cc, which used to have an 18% tax rate. Cars like Honda City, Civic, Toyota Yaris, and Toyota Corolla might get more expensive when the new rules are approved by the federal government.
