Capital value tax (CVT) has been introduced through section 8 of the Finance Act, 2022 on below mentioned assets:
S.No.: Assets/Description: Rate
1. Motor vehicle held in Pakistan: 1% of the value
- the engine capacity exceeds 1300 cc; or
- in case of electric vehicles, the battery power capacity exceeds 50kwh
2. Foreign assets of a resident individual where the value of such assets on the last day of the tax year in aggregate exceeds Rupees one hundred million: 1 % of the value
3. Such assets or class of assets as specified by the Federal Government through a notification in the official Gazette: As specified by Federal Government, not exceeding 5% of the value.
The CVT on motor vehicles will be collected over the period of 5 years. The manner of collection of CVT and value of motor vehicle on which the rate of 1% will be applied to be determined in the following manner:
Import Value: Collector of custom
Ex-factory price: Local manufacturer or assembler
Auctioned Vehicle: Person making sale by public auction or auction by tender
*Note: Above values are inclusive of taxes and duties and reduced by 10 percent each year from the end of financial year in which the motor vehicles have been imported, auctioned or locally purchased.
CVT on motor vehicle is to be collected at the time of import, purchase from local manufacturer or assembler and auction. Every motor vehicle registering authority of Excise and Taxation Department is required to collect CVT at the time of registration of motor vehicle with effect from 1st day of July, 2022 except where the CVT has already been collected from the same person applying for registration at the time of import, purchase from local manufacturer or at auction stage in respect of same motor vehicle.
CVT is to be collected by the Motor vehicle Registration Authority at the time of transfer of registration or ownership of motor vehicle. This means that CVT on every subsequent sale/transfer of motor vehicle whenever occurring within the prescribed five years period is to be collected.
Foreign Assets of a Resident Individual
Any resident person holding foreign assets having value more than 100 million rupees calculated by converting the cost of foreign asset (foreign currency value) with the exchange rate notified by SBP at the last day of financial year, shall pay CVT at the rate of 1% of the cost of foreign assets at the time of filing income tax return. Where the cost cannot be determined with reasonable accuracy, fair value determined at the last day of the tax year will be taken for this purpose.