Govt Approves 5-Year-Old Car Imports from Next Fiscal
In a notable shift in auto import policy, the Government of Pakistan has approved the commercial import of used cars up to five years old. This change, set to take effect in September 2025, was announced during a Senate Standing Committee on Finance session, where Federal Board of Revenue (FBR) officials outlined major customs and tariff reforms.
The move is part of a broader economic strategy aimed at expanding consumer choice, increasing tax revenues, and aligning with global trade norms.
What’s Changing?
Currently, car imports are restricted to three-year-old models under the baggage scheme. The new policy significantly extends this limit.
Key changes include:
- Commercial import of cars up to 5 years old permitted from September 2025.
- A flat 40% additional customs duty on every imported vehicle, regardless of quantity.
- Expansion of vehicle options for consumers while maintaining a protective duty barrier.
This development is expected to attract interest from car importers and buyers seeking better value vehicles, especially as local auto prices continue to rise.
Tariff Reform: A Four-Year Plan
This policy isn’t just a domestic move—it ties into Pakistan’s commitments to the International Monetary Fund (IMF). In exchange for continued support, the IMF has asked for a gradual reduction in vehicle import duties.
Planned tariff changes:
- A 10% reduction in vehicle import duties per year over the next four years.
- Duties will eventually reach 0% by 2029 if the plan stays on course.
Such cuts are likely to shake up Pakistan’s local auto industry, which will face growing competition from imported vehicles—forcing improvements in quality and pricing.
Officials also hinted that, depending on how this phase performs, future policies could allow even six- or seven-year-old vehicles to be imported.
Though the expanded import window benefits buyers with more options, cost barriers remain. The additional customs duty adds a significant expense, and that’s not the only concern.
Recent tax updates:
- Sales tax on vehicles up to 850cc has increased from 12.5% to 18%.
- This change disproportionately affects low-income car buyers, reducing affordability for small cars.
The Senate committee has recommended applying the five-year import limit to both the baggage and commercial schemes. While this is under consideration, officials confirmed that even baggage imports will carry the 40% duty.
The gift scheme—which allows overseas Pakistanis to gift cars to family members—will remain unchanged, preserving a key personal-use import route.
Finance Minister Muhammad Aurangzeb stressed the need for a rational, consistent tariff structure. He argued that unclear and shifting policies have long harmed investment and trade growth in Pakistan. These changes, he said, are intended to bring long-term clarity and support sustainable development.
Whether this move truly benefits the average car buyer or mainly serves importers will depend on how future phases of the policy unfold—and how well they balance protection, pricing, and public interest.