KARACHI: Pakistan is expected to abolish the car import schemes that allow vehicles to enter the country under the baggage and gift programs, both of which provide duty and tax exemptions.
The move comes as part of the ongoing negotiations between Pakistan and the International Monetary Fund (IMF) to reform trade and taxation policies under the $7 billion Extended Fund Facility (EFF).
According to reports, both sides have reached a consensus to discontinue the baggage and gift schemes entirely while tightening the third option — the Transfer of Residence (ToR) — which permits overseas Pakistanis to import vehicles under certain conditions. Under the revised regulations, commercial import of five-year-old used cars will still be allowed, but with much stricter safety and compliance checks.
The IMF has reportedly urged Pakistan’s Economic Coordination Committee (ECC) to approve the abolition of these two import schemes and impose tighter restrictions on the ToR program before the end of the current month. The move is aimed at reducing misuse and curbing the influx of high-value vehicles brought in under personal-use claims but later sold commercially.
Officials have noted that most cars, whether from Japan or the UK, are first routed through Dubai before being brought into Pakistan — a loophole often exploited to evade taxes. “Misuse of imported car schemes has become a persistent issue that must be addressed to ensure fairness and transparency,” one senior official said.
Meanwhile, Pakistan and the IMF are also working to finalize the Governance and Corruption Diagnostic (GCD) Assessment report, which remains a key sticking point in the review talks. To address IMF concerns, the government has formed a task force to strengthen anti-corruption mechanisms, including new Federal Board of Revenue (FBR) rules requiring civil servants in Grade 17–22 to declare assets held by themselves and their spouses.
