Tariff Board okays commercial import of used vehicles with 40pc extra duty

ISLAMABAD: On the demand of the International Monetary Fund (IMF) the Tariff Policy Board (TPB) headed by Minister for Commerce, Jam Kamal Khan has formally approved commercial import of five-year-old used vehicles with 40 percent additional duty.

The approval was made by the Board despite strong opposition by the local industry claiming that used car business is also under FATF radar for monitoring and mitigating risks of Money Laundering (ML) and Anti-Terrorism Financing (ATF), well informed sources in Commerce Ministry told Business Recorder.

The TPB which is comprised of all concerned Ministries including, Commerce, Industries and Production, Finance Division and Federal Board of Revenue discussed the issue of five year used car import in two consecutive meetings.

“TPB has approved the proposal of commercial import of five-year-old used vehicles. Now the summary will be submitted to the ECC this week for its formal nod,” said an official.

According to agreement with the IMF, Pakistan has to reduce its tariff gradually: ARD on commercially imported used vehicles by 10 per cent each year starting from 40 per cent in the fiscal year 2025-26.

“In line with Pakistan’s commitments with the IMF under Extended Fund Facility (EFF), it has been agreed that all quantitative restrictions on the commercial import of used motor vehicles will be removed during first quarter of fiscal year 2026.

Initially this will apply only to vehicles less than five years old, subject to compliance with minimum environmental and safety standards. This age limit restriction will subsequently be removed from July 2026 onwards,” the sources added.

The proposal which has been finalized by the TPB for the ECC says “used vehicles fall under PCT 8703, initially not older than 5 years until June 30, 2026, and thereafter the vehicle age limit will be removed. Additionally, the commercial importation shall be allowed subject to compliance with the environmental and safety standards as notified by the Ministry of Industries and Production or by the concerned Ministries/ Divisions / Departments.”

The country’s auto industry, in its communication with the government has submitted numerous proposals to regulate used car imports, drawing on extensive industry background and global policies, while reiterating its strong dissent against tariff reductions and the opening of commercial used car imports.

“It look like the industry voice is unheeded and steps to de-industrialize the most precious engineering and manufacturing sector are being accelerated,” the industry said adding that Pakistan’s auto industry represents 13 world-leading brands, including Toyota, Honda, Suzuki, and Hyundai, involving 1200 auto parts makers, supporting 1.5 million jobs, and attracting approximately US$ 5 Billion in investment for tooling, facilities, and technology transfer. Pakistan is unique as it is the 16th country globally (out of 197) that manufactures all four segments of vehicles: cars, trucks, buses, tractors, and motorcycles, despite historically low and erratic volumes.

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