Problems relating to Trade and Investment on Pakistan
14. Taxation Systems |
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Issue |
Issue details |
Requests |
Reference |
| (1) Unjustified Levy of Additional Tax by including Royalty in the CKD prices | - Customs authority, after recalculating the knockdown price by addition of royalty that MFS had paid to its headquarters in Japan, ordered MFS to pay additional duty calculated on the total of the CKD price and royalty. MFS has paid royalty to its parent in Japan in consideration for the cost of R&D, design and expenses plus intellectual property rights used by MFS in Pakistan, unrelated to CKD. It customary takes 7-years in average for dispute settlements, burdening heavily upon the clerical workload. | - It is requested that GOP: -- reviews if the logic of adding royalty to CKD price is justified, and -- reduces the amount of additional tax to secure stability in the tax burden. |
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