ECC Allows Car Imports- Duty to be Paid in Dollars

[CSPK]

The Economic Coordination Committee (ECC), the topmost government body on economic decisions, has approved a new policy on the import of vehicles. Under this policy, the duty and taxes on all imported vehicles, whether new or used, will be paid in US Dollars.

According to an official of the ministry of finance, the decision has been taken to support State Bank’s foreign exchange reserves, which stand at $7 billion. According to the decision, the expats will have to arrange for dollars to pay this duty while local recipients will require bank encashment certificate, showing conversion of foreign remittances to the local currency.

Related: Are Used Imports A Blessing?

The personal baggage or gift scheme allows expats to bring home the cars they bought in a foreign country or gift them to friends or family in Pakistan. But this scheme was previously misused by traders who have turned it into a business by importing multiple cars on one passport for commercial purpose. Importing cars result in drain of dollars and inflate our import bill, something the government cannot afford because of a large trade deficit.

https://www.carspiritpk.com/2019/01/16/ecc-allows-car-imports-duty-to-be-paid-in-dollars/

 

[Syed1.]

Wonderful out of the box decision.

 

[ziaulislam]

ban all car sports and force local companies users to bring new tech, decrease duties on parts instead and force safety features..

reason why people buy used foreign cars are safety features

 

[The Accountant]

ban all car sports and force local companies users to bring new tech, decrease duties on parts instead and force safety features..

reason why people buy used foreign cars are safety features

Don't ban sports riding, we are already charging very high taxes ... I paid twice the cost of the bike due to duties ...

Local companies already have enough incentive (price differential) due to these duties however, the demand is very low and therefore does not worth the investment ...

Furthermore, quality is also a big issue ... We should work on quality standards atleast for high-end vehicles ...

 

[Viny]

Wonderful out of the box decision.

And from where one would buy dollars to pay to govt ?
Wont it unnecessarily increase the demand for dollars in country just to pay back to govt.

 

[The Accountant]

And from where one would buy dollars to pay to govt ?
Wont it unnecessarily increase the demand for dollars in country just to pay back to govt.

That will be from open market or from the importer himself ... Government is trying to increase its own reserves at the cost of open market ... On overall basis dollars will remain same in the economy but it will government more power in terms of foreign currency ...

 

[Viny]

That will be from open market
.

Where does $$$ comes in open market ?
If its a legal money, then one has to buy $$$s from bank at open market rate.
If its earned via exports, it still comes into banks, be it foreign currency account or be it regular account.

or from the importer himself ...
.

When someone imports car, isnt it logical to ask payment in PKR?
Because importer will any how need to convert his $$$ bills to PKR to pay to govt. And conversion will be done in govt banks, ultimately reaching govt itself.

In this case what will happen is importer will use his local cash to buy $$$ in order to pay to govt, where as earlier he could pay in PKR itself. Unnecessarily creating unwanted $$$ demand in open economy.

Government is trying to increase its own reserves at the cost of open market ... On overall basis dollars will remain same in the economy but it will government more power in terms of foreign currency ...

Guess govt is thinking like payment at toll plaza, person will drive in his imported car from foreign country and will have $$s in his pocket so we will collect $$ as duty.

It never makes sense to collect any domestic payments in international currency by the government bodies.

 

[The Accountant]

Where does $$$ comes in open market ?
If its a legal money, then one has to buy $$$s from bank at open market rate.
If its earned via exports, it still comes into banks, be it foreign currency account or be it regular account.


When someone imports car, isnt it logical to ask payment in PKR?
Because importer will any how need to convert his $$$ bills to PKR to pay to govt. And conversion will be done in govt banks, ultimately reaching govt itself.

In this case what will happen is importer will use his local cash to buy $$$ in order to pay to govt, where as earlier he could pay in PKR itself. Unnecessarily creating unwanted $$$ demand in open economy.




Guess govt is thinking like payment at toll plaza, person will drive in his imported car from foreign country and will have $$s in his pocket so we will collect $$ as duty.

It never makes sense to collect any domestic payments in international currency by the government bodies.

No there are foreign exchange companies as well ... and private dollar owners as well

 

[Viny]

No there are foreign exchange companies as well ... and private dollar owners as well

Foreign exchange companies, will at the end of day buy and sell $$ to banks. $$$ dont grow on farm land for them nor they can import it from some other countries directly and even if they can do so bypassing the local banking, then its poor banking system and its illegal. And for some reasons if they can buy directly from foreign banks or some foreign assets, then they must be paying PKR to them, which again means when PKR hits back to banks, the bank will have to pay back $$$s to them unless its been used for hawala's

Even if one buys from private dollar owners, it must have been already declared. As if someone is going to pay in $$$'s they for sure would have to present the receipt proving how they got $$$s

 

[The Accountant]

Foreign exchange companies, will at the end of day buy and sell $$ to banks. $$$ dont grow on farm land for them nor they can import it from some other countries directly and even if they can do so bypassing the local banking, then its poor banking system and its illegal. And for some reasons if they can buy directly from foreign banks or some foreign assets, then they must be paying PKR to them, which again means when PKR hits back to banks, the bank will have to pay back $$$s to them unless its been used for hawala's

Even if one buys from private dollar owners, it must have been already declared. As if someone is going to pay in $$$'s they for sure would have to present the receipt proving how they got $$$s

Ever heard of something name HUNDI ?

 

[ejaz007]

Wonderful out of the box decision.

Not necessarily. The USD demand shall increase resulting in further rupee devaluation.

And from where one would buy dollars to pay to govt ?
Wont it unnecessarily increase the demand for dollars in country just to pay back to govt.

The dollars shall come from open market.
One possible benefit could be that government USD reserves may increase.

 

[Viny]

Ever heard of something name HUNDI ?

Are you seriously "The Accountant"
How will the hawala guy or hundi guy produce dollar sells invoice for the buyer of $$.
Who would be obviously asked for proofs of $$s purchased.

Not necessarily. The USD demand shall increase resulting in further rupee devaluation.


The dollars shall come from open market.
One possible benefit could be that government USD reserves may increase.

Did you read other posts related to topic, or just fired the trigger.

 

[The Accountant]

Are you seriously "The Accountant"
How will the hawala guy or hundi guy produce dollar sells invoice for the buyer of $$.
Who would be obviously asked for proofs of $$s purchased.



Did you read other posts related to topic, or just fired the trigger.

You dont know the currency market of Pakistan ... the foreign currency market involves currency dealers which are far bigger player than banks and are involved hundi and hawala ... they are generally cheaper than banks therefore people mostly use them for exchange rather than bank ... this is to take currency from them and document the movement of currency from them ... this is a long short to establish money trail ...

 

[Viny]

You dont know the currency market of Pakistan ... the foreign currency market involves currency dealers which are far bigger player than banks and are involved hundi and hawala ... they are generally cheaper than banks therefore people mostly use them for exchange rather than bank ... this is to take currency from them and document the movement of currency from them ... this is a long short to establish money trail ...

Let me try to give some basics

1. The Official Currency dealers give user better pricing because they deal in bulk amounts with bank. A normal user will get card rate (lower than prevailing market rate for sell and higher for buy) for conversion from USD to PKR or PKR to USD, where as large amount dealers will get almost international market rate. And they make earning on this difference.

So if people are using these services at the end of the day $$$ movement happens at banks or govt organization level. And this get recorded.

2. People getting $$$ via hundi/hawala or someone smugling into the country will never be able to produce sell invoice. Thus this hundi/hawala $$$ will always settle for non official transactions. They can be helpfull for unaccounted remittances etc for worker class. Which sooner or later government will lure and trap as is very clear that remittance is big income source for Pakistan.

 

[The Accountant]

Let me try to give some basics

1. The Official Currency dealers give user better pricing because they deal in bulk amounts with bank. A normal user will get card rate (lower than prevailing market rate for sell and higher for buy) for conversion from USD to PKR or PKR to USD, where as large amount dealers will get almost international market rate. And they make earning on this difference.

So if people are using these services at the end of the day $$$ movement happens at banks or govt organization level. And this get recorded.

2. People getting $$$ via hundi/hawala or someone smugling into the country will never be able to produce sell invoice. Thus this hundi/hawala $$$ will always settle for non official transactions. They can be helpfull for unaccounted remittances etc for worker class. Which sooner or later government will lure and trap as is very clear that remittance is big income source for Pakistan.

Get out of text book man ... get into real world ...

What r u telling me is text book stuff ... if u dont know how things work in the real world its not my problem ... go and read money laundering scam of khanani and kalia and company ... its relationship with zardari and how one of his brother got killed ... i dont have time to teach u how illegal black economy works ...