ISLAMABAD: Directorate General of Post Clearance Audit (PCA) has uncovered a significant under-invoicing scandal involving luxury vehicle imports.
The report revealed that a 2023 Toyota Land Cruiser, typically worth millions, was cleared for customs at an astonishingly low value of Rs 17,635 through the Faceless Customs Assessment (FCA) system.
The audit report highlights a stark pattern of undervaluation in luxury vehicle imports, where the declared values of vehicles were substantially lower than the assessed values. This has raised concerns over large-scale trade-based money laundering and systematic fraud in Pakistan’s luxury vehicle import sector.
Of 1,335 Goods Declarations examined by auditors, the discrepancy between declared and actual duties amounted to over Rs 1 million, pointing to widespread under-invoicing. The total declared import value for these vehicles was Rs 670 million, while the actual assessed value was Rs 7.25 billion, resulting in a shortfall of Rs 17.5 billion in tax payments.
In one notable case, a 2023 Toyota Land Cruiser, imported from Japan, was declared at just Rs 17,635, despite its actual value being Rs 10,049,868. The customs duty and taxes levied were Rs 47.2 million, which marked a staggering 99.8% under-invoicing.
The audit revealed that in every case, importers failed to provide proof of foreign exchange remittances for vehicle purchases, indicating the use of illegal money transfer networks such as Hawala and Hundi to pay for the vehicles abroad. This lack of documentation raises serious concerns about the legitimacy of these transactions.
The fraudulent practice, according to auditors, not only resulted in significant tax shortfalls but also led to the under-valuation of assets in Income Tax Returns, further complicating the financial integrity of these operations. Customs officials, despite identifying these discrepancies, did not enforce proper documentation checks, allowing the system to be exploited.
The PCA flagged these activities as a high-risk Trade-Based Money Laundering (TBML) scheme, which could severely undermine Pakistan’s financial stability and its anti-money laundering efforts. This revelation comes at a time when Pakistan is working to strengthen its compliance with international financial standards set by organizations like the Financial Action Task Force (FATF) and the International Monetary Fund (IMF).
