No revenue loss in vehicle imports under Baggage Scheme, says Customs

KARACHI : Pakistan Customs Appraisement South strongly refutes the misleading claims recently published in a section of the media regarding alleged under-invoicing and trade-based money laundering in the import of luxury vehicles through the Faceless Customs Assessment (FCA) system, allegedly on the basis of some audit report compiled by the Directorate General of Post Clearance Audit.
It is important to categorically clarify here that old and used vehicles are currently not permitted for commercial importation into Pakistan in terms of Appendix C of Import Policy Order (IPO), 2022. Such vehicles can only be imported by Overseas Pakistanis under the Personal Baggage, Transfer of Residence (TR), or Gift Schemes, as prescribed under Appendix E of IPO, 2022. These schemes are designed to facilitate Pakistani citizens residing abroad and not the commercial traders.
The foreign exchange used for purchasing such vehicles originate from outside Pakistan. Additionally, the Policy requires that the remittance for payment of duty and taxes on import of these vehicles must also originate from outside Pakistan from the account of the overseas Pakistani sending the vehicle from abroad and received in his/ her account here or in the account of his family. Any insinuation of illegal financial flows without evidence thus undermines the integrity of the regulatory framework and the overseas community’s lawful participation in such schemes.
It is further clarified that under these schemes:
The values declared in these Vehicle Baggage (VB) Goods Declarations (GD) are a procedural formality to initiate clearance and do not determine the basis for assessment of duties and taxes.
Vehicles imported under these schemes do not possess commercial invoice values in the conventional sense. Moreover, this matter was conclusively adjudicated by the honorable Sindh High Court vide judgment dated 24.12.2020 in SCRA No. 638 of 2019, which upheld the dismissal of questions on the legality of declaring indicative values for clearance purposes by overseas Pakistanis.
For Asian make vehicles up to 1300cc, duties and taxes are collected as specified in the notification SRO 577(I)/2005 dated 06.06.2025, and for vehicles exceeding 1300cc, assessments are conducted under Customs General Order No. 14 of 2005 and Valuation Ruling No. 1051/2017. Hence, the final duty and tax liability is determined solely at the assessment stage, and not in terms of the declared value.
Therefore, there exists no legal or procedural correlation between the declared value and the duties or income tax assessed. Any suggestion that importers are evading taxes based on declared values is not only factually incorrect but also reveals a lack of understanding of the customs clearance process for such vehicles.
It is thus reiterated that all assessments are made strictly in accordance with applicable laws, rules, and valuation procedures, and there is no revenue loss in import clearance of such vehicles. Pakistan Customs remains committed to combating all forms of tax evasion, trade-based money laundering, and system exploitation. However, we caution against the dissemination of misconceived and flawed reports that may damage public confidence and unfairly malign law-abiding overseas Pakistanis.