Pakistan to Allow Import of Used Cars from Sept 2025 with 40% Customs Duty
In a major development set to reshape Pakistan’s automotive import landscape, the federal government has decided to allow the import of used cars up to five years old starting from September 2025. These imports—whether through commercial channels or the baggage scheme—will carry a 40% additional customs duty, according to a briefing given to the Senate Standing Committee on Finance.
The announcement came during a committee session chaired by Senator Saleem Mandviwalla, where officials from the Federal Board of Revenue (FBR) and Ministry of Commerce shared upcoming changes in the customs tariff structure.
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This policy revision marks a significant departure from current regulations, which restrict the import of vehicles to those no older than three years under the baggage scheme. The Commerce Ministry has supported the recommendation to expand this limit to five years, aligning it with the government’s broader economic commitments under the International Monetary Fund (IMF) program.
As part of these commitments, Pakistan is set to gradually reduce import duties on vehicles to zero over the next four years. The Ministry of Commerce stated that this transition will involve a 10% reduction in duty each year, beginning in the new fiscal cycle.
“The tariff structure is a core issue, and we need consensus and support to implement these changes,” Finance Minister Muhammad Aurangzeb remarked during the meeting. He emphasized that the revised duty framework is a cornerstone of the new auto policy aimed at rationalizing tariffs and opening up the market.
Officials also hinted at further liberalization in the future, suggesting that vehicles up to six or seven years old might eventually be permitted for import under the updated policy.
Meanwhile, the committee also reviewed a proposal to exempt duty on the import of grandparent chicken for poultry breeding, citing minimal revenue impact—approximately Rs. 30 million annually—and significant industry demand. The committee expressed support for waiving this duty to boost domestic poultry production.
Additionally, the FBR confirmed that the tax rate on vehicles up to 850cc has been increased from 12.5% to 18% as part of broader fiscal adjustments.
The session also covered existing vehicle import schemes for overseas Pakistanis. Under the gift scheme, expatriates are allowed to gift one vehicle to a family member, a provision that remains intact.
However, caution was advised by Senator Shibli Faraz, who noted that the prospect of zero duties in the coming years may encourage importers to delay purchases, potentially distorting the market in the interim.
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