The Finance Act, 2022 has enacted CVT in respect of the following:
Motor vehicle held in Pakistan – engine exceeds 1300cc or electric vehicles, battery power exceeds 50 kwh:
Rate of CVT: 1% of the value
Basis of value:
1. Imported vehicle – import value as assessed by the Customs authorities as increased by import duties and taxes
2. Vehicles locally manufactured / assembled – ex-factory price inclusive of all duties and taxes
3. Auctioned vehicles – auction price inclusive of all duties and taxes
Note: Value of the vehicle shall be reduced by 10% each year. Value shall be zero after 5 years from year of acquisition. Motor vehicle registering authority shall collect CVT at the time of registration or transfer of registration if CVT on such vehicle has not been paid at time of import, purchase from local manufacturer or auction, as the case may be.
Foreign assets of resident individual – value in aggregate exceeds Rs. 100 million on last day of the tax year
Rate of CVT: 1% of the value
Basis of value:
1. the cost of the foreign assets, in relevant foreign currency converted into PKR as per SBP exchange rates on the last day of the tax year;
2. where cost (as provided above) cannot be determined with reasonable accuracy, the fair market value of the sset in foreign currency converted into PKR as per SBP exchange rates on the last day of the tax year.
Foreign assets mean any movable or immovable assets held outside Pakistan, whether directly or indirectly, and includes but not limited to real estate, mortgaged assets, stock and shares,bank accounts, bullion, cash, jewels, jewelry, paintings, accounts and loan receivables, assets held in dependents’ name, beneficial ownership or beneficial interests or contribution in offshore entities or trusts.
** Under entry 50 of Federal Legislative List, tax on capital value of immovable property can only be imposed by provincial government. However, it appears that such restriction is applicable only on immovable property situated in a province and not outside Pakistan.
Such assets or class of assets as may be specified by Federal Government through notification in official
Gazette.
Rate of CVT: Not exceeding 5% of the value as prescribed in the notification
Basis of value: to be specified in the notification
Where a person fails to pay or collect CVT or having collected CVT fails to pay the same to the credit of the Federal Government, the Officer Inland Revenue may pass the order after giving the person an opportunity of being heard and proceed to recover the CVT under the provisions of the Income Tax Ordinance, 2001 and the Income Tax Rules, 2002 as if the CVT were an arrear of income tax. Such person will also be liable to pay Default Surcharge @ 12% per annum on the tax unpaid computed for the period commencing on the date on which the CVT was due and ending on the date on which it was paid.
Any person dissatisfied with any order passed by the Commissioner or an officer of Inland Revenue under this section may prefer an appeal before the Commissioner (Appeals) against the order as provided under section 127 shall apply accordingly. The provisions of the Income Tax Ordinance relating to the further appeal process shall apply in respect of Appellate Order passed by Commissioner (Appeals).
