KARACHI: The extensive under-invoicing of imported Chinese tyres in Pakistan is causing huge tax losses to the government, said CEO General Tyre.
Hussain Kuli Khan said that the local industry plays a vital role in the economic development by paying taxes and generating employment besides saving millions of dollars as an import substitute. Therefore, it is the responsibility of the government to protect its local industry, he added.
The local tyre industry is facing two major issues namely smuggling and low ITP values, he said and added that the extensive under-invoicing of imported Chinese tyres in Pakistan is causing huge tax losses to the government while at the same time it is a major obstacle to new investments in the local tyre industry.
The imports of Chinese tyres in the passenger car category has increased to 300 percent. Similarly, the import of Chinese tyres for light trucks has increased by 150 percent in two years and their market share in this category has increased to 75 percent.
Chinese tyres are also being imported for trucks and busses radial and their market share in this segment has increased from 60% to 90% in the last two years.
He said the main reason for under-invoicing of Chinese tyres is their Import Trade Price (ITP) which has not changed since August 2018, although the price of raw materials and other factors have led to a significant increase in the international prices of tyres.
“The loss to the government due to the non-revision of ITPs can be gauged from the ratio of imported tyres for truck buses radials, which accounted for 95 percent of the 975,000 imported tyres in nine months.
“For example, the ITP of one tyre (size 11.00 R-20) showed as $147 while the price of a well-known brand of tyres of the same size is $160. Thus, under-invoicing of only one tyre caused a loss of approximately Rs 7 million to the national exchequer,” Hussain said.
He therefore said that it is necessary to maintain regulatory duty and increase ITPs of imported tyres to prevent the national exchequer and local industry from a big damage and proposed to increase 25 percent in the ITP as it would not only generate additional revenue of Rs 3 billion for the government but also attract new investment at local level.
Copyright Business Recorder, 2021
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