FBR and Commerce Ministry Don’t Agree on Temporary Import/Export of Used Vehicles

The Federal Board of Revenue (FBR) is at odds with the Ministry of Commerce over its proposal for temporary import/export of vehicles to businesses with automobile repair facilities. Business Recorder reported that the Commerce Ministry received several ideas for enabling the temporary import of accidental and damaged vehicles on an import-cum-export basis, with the vehicles being re-exported overseas following necessary repairs. The tax machinery has opposed this scheme and termed it impractical. Similarly, to facilitate and boost exports, numerous schemes have been developed under EFS 2021, however, commodities on the negative lists (banned items) cannot be imported under EFS unless the required permissions are granted. On October 10, 2023, officers from the FBR, Ministry of Industries and Production (MoI&P), State Bank of Pakistan (SBP), and Commerce Ministry attended a consultative meeting to review the proposal’s many aspects. SBP and MoI&P had supported the proposal that effective controls be implemented to prevent misuse of the scheme; temporarily imported vehicles be re-exported after restoration/repair work and domestic sale be prohibited; performance audits of firms operating under the subject scheme be conducted quarterly or semi-annually; and the scheme be restricted initially to vintage cars only, among other things. MoI&P supported the idea in general but requested clarifications. Meanwhile, FBR opposed the proposal on the grounds that repairing vehicles isn’t in the scope of International Toll Manufacturing (ITM) as contained in rule-871(0) of the EFS 2021 and was impractical because issuance of authorization and analysis certificates would be difficult for the vehicles involved. To expedite passage of the proposal by the Economic Coordination Committee of the federal cabinet, the Commerce Ministry has suggested the following: