New auto entrants demand tax relief to plug losses

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LAHORE: New entrants in the country’s auto sector, including Nishat Hyundai Motors Pakistan Limited (NHMPL) and Kia Lucky Motors Pakistan Limited (KLMPL), have demanded the government to completely waive sales tax on input at the import stage.

Talking to Pakistan Today, KLMPL Chief Operating Officer (COO) Muhammad Faisal demanded that the input sales tax for new entrants should be waived completely till the situation improves.

“As inventories are piling up and there are no sales to show, the government should completely waive sales tax on input for new entrants like us.”

Agreeing with Faisal, NHMPL Chief Financial Officer (CFO) Noreez Abdullah said in addition to waiving input sales tax at the imports stage, the government should also return the amount already received on account of input sales tax.

Abdullah said that as a greenfield auto manufacturing concern, the company would request the government to allow sales tax refunds to those who have just come out of their construction phase and are struggling with the prevalent economic downcycle, which is being further exacerbated by the spread of Covid-19.

“The refunds will greatly help in easing the liquidity crunch faced by the sector, which is finding it hard to get new working capital lines from the banks under the present conditions,” Abdullah noted.

He also demanded an extension in the ‘introductory period of new models’ amid slowdown caused by the coronavirus (Covid-19) outbreak in the country.

The CFO noted that the country’s introductory period of news models is timebound under the auto policy. “So, we would like to request the government to extend the June 2021 deadline under auto policy to the equivalent period of lockdown in Punjab, or airspace closure, whichever is lengthier for the new entrants,” Abdullah demanded.

He informed that the arrival of foreign technical advisers is being delayed due to the ongoing lockdowns and closure of airspace, adding that critical project-related activities are getting a hit owing to the closure of markets.

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