In a significant policy shift aimed at restructuring the country’s automotive import landscape, the Government of Pakistan will allow the commercial import of used vehicles up to five years old starting September 2025. The announcement was made during a Senate Standing Committee on Finance session chaired by Senator Saleem Mandviwalla, where Federal Board of Revenue (FBR) and Ministry of Commerce officials outlined key details of the new import regime.
Flat 40% Duty on Used Car Imports
Under the revised policy, all used vehicles—regardless of whether a single unit or multiple are imported—will be subject to a uniform 40% customs duty. This flat rate will apply both under the commercial import scheme and the existing baggage scheme, which currently limits vehicle imports to cars no older than three years.
The committee has recommended extending the age limit to five years for vehicles imported under both schemes, marking a major departure from longstanding restrictions. Officials added that there are considerations to allow vehicles as old as six or seven years in the near future.
IMF-Linked Tariff Reductions on the Horizon
The move comes as part of Pakistan’s broader compliance with International Monetary Fund (IMF) requirements, which include a phased reduction of import duties on vehicles to zero over the next four years. As outlined by Ministry of Commerce officials, import duties will be reduced by 10% annually, with the goal of gradually liberalizing the auto import sector.
Finance Minister Muhammad Aurangzeb acknowledged the significance of this reform, calling tariffs a “fundamental issue” and urging institutional support for the proposed changes.
Industry and Policy Adjustments
In addition to the new auto import policy, the committee discussed industry-specific duty adjustments, including:
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A duty hike from 12.5% to 18% on vehicles up to 850cc, potentially impacting affordability for low-income buyers.
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A proposal to lift import duty on grandparent chicken used in poultry breeding, following requests from the agriculture sector. FBR noted that the revenue from this category stands at just Rs. 30 million annually.
Overseas Pakistanis and Gift Scheme
The committee also reviewed the vehicle gift scheme, which allows overseas Pakistanis to gift one vehicle to a family member. While the scheme remains unchanged for now, lawmakers expressed concerns that anticipated duty reductions might encourage people to delay imports, waiting for further concessions.
Senator Shibli Faraz cautioned that these measures could disrupt market dynamics if not carefully phased in, suggesting that clarity and gradual implementation will be crucial to avoid economic distortion.
