Federal Board of Revenue still unclear on Hummer’s classification

Federal Board of Revenue still unclear on Hummer’s classification

Federal Board of Revenue (FBR) is yet to make a decision whether General Motors signature car, Hummer, be classified as a luxury or commercial vehicle.

According to the law, taxes levied upon imported vehicles vary as per their category. If a car is classified as a luxury vehicle then they are charged duties at the rate of 150% of its original value while commercial vehicles are
only charged 20%.

Since FBR are still unclear on Hummer’s category, millions of rupees in taxes remain disputed in cases.

It has been four months since a board was setup to bring this specific dispute to an end. However, even after all this time the problem is still prevailing and the panel has failed to jump to a conclusion.

In June, an importer of Hummer and FBR were at logger heads over the category of the car. This prompted Federal Tax Ombudsman (FTO) to intervene in the matter and after considering the complaint of importer they ordered FBR to
release the car on provisional basis, considering it as commercial vehicle. The FTO’s order is not ultimate as the final decision authority is FBR.

FTO requested FBR to make up a committee to determine original value of the vehicle and finalize its category. FTO did not fix any timeline to resolve the dispute but as per Customs Act 1969, the dispute over duties valuation has
to be resolved within six months which can be extended by up to 90 days in case of ‘exceptional nature of circumstances’

If Federal Board of Revenue is unable to resolve the case, the provisional category will be termed as the final.

FBR Member Customs, Mumtaz Haider Rizvi, said “The committee has held few meetings but no decision has been taken on the category of the vehicle. The committee has also sought relevant data about the exact category of the vehicle
from the manufacturer.”

The FTO divulged that the provisional categorization was based on seating capacity. As per FTO observation the vehicle was above ten seats and fell in the group of commercial vehicle, however, the General Motors website states
that Hummer has five seats.

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Posted by Wajahat Javed on Nov 15 2011. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry