Govt Rejects Plan to Register Non Custom Paid Cars

The government has dismissed the proposal for a one-time duty and tax concession for non-customs duty paid automobiles in tribal areas.

The Revenue Division had drafted a plan to regularize non-customs duty paid automobiles and submitted it to the Cabinet for approval, as per The Express Tribune.

The division told the Cabinet that the Customs Act 1969, was extended to the former Federally Administered Tribal Areas (FATA) and the Provincially Administered Tribal Areas (PATA) in 1984 and 1975 respectively. Consequently, taxes and duties were applied in ex-FATA/PATA via border customs stations but only in the import phase.
However, customs officials were not deployed inside ex-FATA/PATA, and the customs laws were not implemented either, specifically in relation to non-customs duty paid cars.

FATA/PATA Merger With KP Affecting Taxes
FATA/PATA was merged with Khyber Pakhtunkhwa (KP) after the 25th Amendment to the Constitution that was passed in May 2018, while all the federal laws were subsequently extended to them as well.

The Economic Coordination Committee (ECC) had accepted some tax reductions for ex-FATA/PATA residents during a meeting on 31 May 2018. Later, on July 18, 2018, the federal Cabinet stated in the view of “the peculiar nature, geography as well as economic backwardness of ex-FATA/PATA, a phased approach for the enforcement of federal tax laws was necessary”.

This slightly broadened the scope of tax exemptions for non-customs duty-paid cars, including the approval that certain vehicles “may be allowed to be used in FATA/ PATA for a period of five years ending 30 June 2023”.

Regardless, these vehicles may be seized if they cross over into other parts of the country.

Vehicles to be Seized After 5 Years
Vehicles may be surrendered to the authorities after five years, and the residents of the merged areas may be given the option of having their vehicles regularized by paying leviable duty and taxes, as well as a premium.

By the end of September 2018, the local government of the pre-merger tribal areas had authenticated and verified the numbers of such cars, besides the makes, models, and chassis numbers, submitting the data to Customs officials.

The Federal Tax Ombudsman (OM) had requested information on 8 June and 24 July 2018 about the non-customs duty paid automobiles registered with local authorities. The provincial government divisions had responded by providing information of around 155,000 such vehicles that had been registered with local authorities.

However, vehicle smuggling persisted in these areas (especially in the Malakand Division), posing a threat to the maintenance of law and order due to their potential for misuse.

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