ISLAMABAD: The Federal Board of Revenue (FBR) has reduced the capital value tax (CVT) on vehicles from two percent to one percent under the amended Finance Bill 2022.

According to sources, under the Finance Bill 2022, the FBR has proposed a levy of tax on the capital value of certain assets. A tax shall be levied, charged, and collected, to be called the capital value tax 2022 on the value of assets at the provided rates. The capital value tax shall be charged on the motor vehicle held in Pakistan where the value of the motor vehicle exceeds Rs 5 million.

Sources said that the CVT has now been reduced from two to one through an amendment in the Finance Bill 2022.

The FBR has also provided the procedure to determine the value of the vehicles. In the case of a motor vehicle, where the vehicle is imported in Pakistan, the import value assessed by the Customs authorities as increased by customs duties.

Where the vehicle is manufactured or assembled locally in Pakistan, the value at which the motor vehicle is sold by the local manufacturer or assembler.

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Where the vehicle is auctioned, the auction price; or in any other case, the total consideration paid to acquire, alter or improve the vehicle; the value of the motor vehicle mentioned shall be reduced by 10 percent for each year from the end of the financial year in which the motor vehicle is acquired. The Collector of Customs shall collect tax at the time of import of motor vehicle on the import value as increased by Customs duties at the rate specified.

Local manufacturer or assembler shall collect tax from the buyer of the motor vehicle on sale value at the rate specified in the First Schedule, the FBR added.

Copyright Business Recorder, 2022