FBR Announces Policy Relaxation for Local Sales of Imported Cars by Embassies

In a significant development, the Federal Board of Revenue (FBR) has introduced a more lenient policy regarding the local sales of imported vehicles by embassies and diplomatic missions. The FBR recently issued a notification, SRO.923(I)/2023, which amends S.R.O. 577(I)/2006.

Under the newly established "special category" for local sales of diplomatic vehicles in Pakistan, if a vehicle is sold or disposed of within two years from the date of importation, 100 percent of the applicable duty and taxes will be levied at prevailing exchange rates and duties/taxes based on the value determined in foreign currency at the time of importation.

However, if the imported diplomatic vehicle is sold or disposed of after the expiry of two years, no duty or taxes will be applicable, as stated in the notification.

Previously, imported diplomatic vehicles were categorized as Category-I, Category-II, and Category-III for potential sale in Pakistan. With the introduction of the "special category," an additional option has been created to accommodate the evolving needs and circumstances surrounding the local sales of these vehicles.

Under S.R.O. 577(I)/2006, the Federal Government had granted customs duty and tax exemptions for vehicles, including motor cars, falling under the respective headings of Chapter 87 of the First Schedule to the Customs Act, 1969, when imported by diplomatic representatives or missions of foreign governments in Pakistan. These vehicles could then be sold or disposed of within the country to individuals eligible to import them without payment of customs duty and other taxes, as outlined in the notification.

This revised policy by the FBR is expected to facilitate the diplomatic community in Pakistan by providing more flexibility in managing their imported vehicles. It not only streamlines the process but also ensures that duty and tax obligations are appropriately addressed based on the timing of the sale or disposal of these vehicles.

The relaxed policy will have a positive impact on the local automotive market and further enhance diplomatic relations by facilitating smoother trade and operations for embassies and diplomatic missions. The FBR's progressive approach in revising the regulations demonstrates its commitment to fostering a conducive environment for foreign missions and supporting their endeavors within Pakistan.

As the FBR introduces this new policy, it is anticipated to generate increased interest and activity in the local market for imported diplomatic vehicles, creating opportunities for both buyers and sellers alike.

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