In a bid to tackle the issue of non-custom paid (NCP) vehicles and incorporate them into the tax system, the Khyber Pakhtunkhwa (KP) Excise and Taxation Department has proposed a new plan focusing on Malakand Division and merged tribal districts. This region has a notably high number of NCP vehicles.
Data Collection and Customs Duties
The department has already gathered data on over 110,000 NCP vehicles in these areas with help from Malakand Levies and the police. This data, which includes vehicle owners’ details, chassis numbers, and registration numbers, has been entered into the department’s database. The Federal Board of Revenue (FBR) will use this data to calculate the appropriate customs duties based on engine capacity.
An official from the department has mentioned that while customs duty rates have been proposed, the final decision will be made by the FBR. Vehicle owners are urged to register their vehicles and pay the necessary duties, as failure to do so could result in vehicle confiscation.
Challenges and Previous Efforts
The KP Excise Department recently updated the provincial cabinet about the ongoing challenges posed by NCP vehicles. These vehicles evade taxes, leading to significant revenue losses for the government, distort the market for legally registered vehicles, and contribute to road safety issues. Previous attempts to address this problem have shown a worsening trend; for example, a profiling campaign in 2017-18 identified 99,334 NCP vehicles in Malakand Division. By December 2023, this number had surged to over 102,000.
KP Excise Department’s Proposal
In a statement to PakWheels, a KP Excise and Taxation (E&T) Department official confirmed that the plan is still in the proposal stage. The department is actively collecting data on NCP vehicles and the program will take time to finalize.
The proposal suggests that each CNIC holder should be allowed to regularize one vehicle and recommends a bulk registration facility for dealers, with an additional 10% duty on each vehicle. This strategy aims to bring untaxed vehicles into compliance and eliminate the prevalence of NCP vehicles.
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