Pakistan, IMF reach consensus to scrap tax-free car import schemes

• Two import car schemes scrapped under IMF-Pakistan agreement.
• Govt tightens Transfer of Residence scheme for used cars.
• Five-year-old used cars allowed under stricter import conditions.
  

Pakistan and the International Monetary Fund (IMF) have agreed to abolish two tax-free car import schemes and tighten regulations on the third scheme as part of efforts to curb misuse and improve transparency in the import regime.

The two sides reached a consensus to discontinue the baggage and gift schemes, while stricter controls will be imposed on the Transfer of Residence scheme, which allows overseas Pakistanis to import vehicles when returning to the country, The News reported.

While commercial import has been granted permission for five-year-old used cars, its conditions will be stringent, with tightened safety guards.

Pakistan and the IMF are scheduled to conclude review talks on Wednesday for the completion of the second review under the $7 billion Extended Fund Facility (EFF) and the first tranche of $400 million under the Resilience and Sustainability Facility (RSF) of $1.4 billion.

The IMF has set a deadline for obtaining approval from the Economic Coordination Committee (ECC) of the Cabinet for the abolition of two schemes and the tightening of the third one within the current month.

On the tariff rationalisation plan, both sides agreed that the two schemes under the baggage rules and the gift scheme for importing cars would be abolished. For the third scheme, the Transfer of Residence, vehicles will only be imported from a country where the individual has stayed for at least one year, and misuse of this scheme will be curtailed.

One official commented that all vehicles, whether from Japan or the UK, are imported to Dubai first and then brought into Pakistan, so the misuse of imported cars must be curtailed.

Pakistan and the IMF are still working to evolve a consensus on the release of GCD Assessment report, which remains a bone of contention between the two sides. According to insiders, the government established a task force to conduct a detailed review of the vague anti-corruption framework and shared it with the IMF. The task force recommended that the FBR notify draft rules about the “Declaration of Assets of Civil Servants serving in Basic Pay Scale 17-22 and their spouses.”

It also recommended making amendments in the Civil Servants Act, 1973, to allow for the publication of Assets and Liabilities of Civil Servants; making amendments in the Elections Act to mandate Non-Elected Advisors and Special Assistants to the Prime Minister to furnish their statement of assets and liabilities; and making necessary amendments in the NAB Ordinance and the FIA Act to ensure a clear mandate definition, prepare a joint offence list, and establish coordination mechanisms between the two agencies to work harmoniously on offences where both have jurisdiction.

Further recommendations include providing training on jurisdictional boundaries to officers of the NAB, FIA, and Provincial Anti-Corruption Establishments (ACEs); making arrangements for repatriating investigating officers of the FIA posted at airports for processing immigration and tasking that responsibility to another force; and investing in technology, capacity building, and training of the FIA, NAB, and provincial ACE investigators to bring them on par with their regional counterparts.

Additionally, the task force advised conducting awareness campaigns to instill a culture of integrity among officials and educate the public on their right to seek disclosure of public information under the Right to Information Act and on the regulatory framework for reporting corrupt practices; making provisions for the appointment of lawyers through open advertisement based on specific expertise to ensure quality prosecution and for the appointment of independent members of the legal fraternity in special courts on judicial assignments; and empowering Provincial Anti-Corruption Establishments to handle money laundering cases at the provincial level.

The recommendations also include establishing a central coordination forum for assistance in investigation, forensics, intelligence sharing, and addressing jurisdictional issues; ensuring that Chief Internal Auditors are appointed within Ministries and Divisions as required by the Public Finance Management Act; and ensuring strict compliance with the State-Owned Enterprises (Governance and Operations) Act, 2023, and that government entities are run in line with section 36 of the Public Finance Management Act, 2019.