Pakistan tire importers demand reduction in customs duty
ERJ staff report (TP)
Karachi – The Pakistan Tyres Importers and Dealers Association (PTIDA) last week proposed to reduce customs duty in the range of five percent to 20 percent on tires to arrest smuggling of the product, reported Javed Mirza for The News.
In the budget proposals presented to Finance Minister Ishaq Dar, the tire importers recommended reduction in the customs duty on import of passenger car tires from the existing 25 percent to five percent.
For the import of light truck tires – from the existing 20 percent to five percent. For the import of truck/bus tires, which is currently five percent, they proposed a zero rating,.
Tires are the preferred choice of smugglers due to the high rate of import duties and sales tax along with the huge gap between local demand and production.
This not only hurts government revenue and legal importers, but also local industry.
The proposals further said the local market requires tires in 250 different sizes and patterns, of which 80 percent are radial, while the local industry produces only 50 sizes/patterns, of which 50 percent production is non-radial.
The local market needs 9.75m tires (excluding tractor and motorcycles), of which the local manufacturing caters to only 1.21m tires, while legal imports amount for 2.7m tires per annum.
Local tire manufacturers were already exempted from the customs duty and withholding tax on the import of raw material.
The PTIDA said reduction in duty structure will not affect the sales and profitability of the local manufacturers because of their captive customer base.
Moreover, it will transform the undocumented trade towards documentation and the government will earn additional revenue of Rs2.5bn (€18.2m).
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