Auto parts dealers berate complex tax structure

KARACHI: Auto vendors on Friday expressed concern over high taxes and customs duty, and notices issued to them from the Federal Board of Revenue.

The complex tax structure costs more than 90 percent in most cases, they said during a meeting with the newly-elected president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Nasser Hyatt Maggo.

“The business sector especially importers of automobile items who fulfill the legal requirements suffer the most as the authorities have failed to control the flow of smuggled auto parts in the market,” said Arshad Islam who led a delegation of Pakistan Automobile Spare Parts Importers and Dealers Association.

The delegation sought support from FPCCI to bring m0ultiple taxes and customs duties down. The rational taxation is necessary to compete in the local market, they said.

Maggo said FPCCI is willing to resolve all the issues of the business community which are long-awaited and have not been taken up due to the constraint of lockdown related to coronavirus during the last year.

He assured the continuous indiscriminate support to all business community and industry.

The meeting suggested the FPCCI to consider the formation of a centralised committee with the consensus of all shattered associations dealing with automobile parts dealers, importers, and local manufacturers to address the issues of income-tax, sales tax, and customs.

The meeting also suggested the formation of groups under FPCCI to meet with the authorities particularly the national tax commission, customs, valuation department, and other relevant departments to address the issues of the automobile parts business sector.

Athar Sultan Chawla, vice president of the FPCCI, said the FPCCI welcomes the suggestion from the participants and expects the written working papers from the traders to work on the issues faced by the automobile parts business sector.

He announced every possible effort to protect and promote the business community and industry.

Exorbitant taxes are the real cause behind high prices of cars in Pakistan as taxation constitutes at least 40 percent of the retail value of a new car, analysts said.

Approximately 40 percent of the total price of locally-manufactured cars is made of taxes. The value includes at least seven taxes and levies, namely customs duty, additional customs duty (based on engine size), income tax, general sales tax, federal excise duty, withholding tax and registration tax.