Automobile manufacturers ask govt for tax relief due to drop in sales

Lahore: Automobile manufacturers in the country have asked the federal government to provide tax relief in the wake of sharp drops in demand affecting the automobile industry, according to a news source. A representative from one of the major automobile firms revealed that the industry had already faced a drop in demand by almost 50% due to the taxation policies implemented in the first quarter of the current fiscal year.

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He added that the COVID-19 crisis had led to a further drop, leading to huge financial losses for the sector.  According to the source, if this lockdown continues, the industry will not be able to pay its suppliers, employees, or utility bills.

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The tax relief measures the sector’s representatives suggested are:

• Slash import duties on completely-knocked-down kits to 10% till December
• Remove Federal Excise Duty (FED) on locally manufactured vehicles
• Withdraw 3% additional sales tax on automobiles
• Reduce minimum tax from 1.5% to 0.25% for manufacturers, vendors, and dealers
• Cut general sales tax by 50% till December
• Revoke the increase in additional customs duty for imports
• Release outstanding refunds of income tax and sales tax to the industry
• Reduce income tax for salaried people by 25% for the tax year 2019
• Exempt withholding tax on salaries for the last quarter of the current fiscal year
• Reduce corporate tax rate to 28%