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Import cars in Pakistan – Frequently Asked Questions

Can we import used vehicles?

Yes. New as well as old cars up to three years can be imported but there is a limitation on import of used car based on its age (the date of manufacturing is the deciding factor).

 

How old a car can be imported in Pakistan?

Currently, a maximum of three years old car can be imported. As of today, 04 December, 2017, Only cars having date of manufacturing as old as 05 December, 2014 can be imported and any car older by even one week is not allowed.

 

Is it cheaper to import a used car or buy a new local car?

Generally, local cars are cheaper than the imported ones, because of heavy import taxes such as Custom Duty as Government has the responsibility to promote local industry. For this reason, we don’t see brand new imported cars on the road much often.

Having said that, used imported cars cost almost equal to the new local cars. Both have their own advantages, one obvious advantage of the local car is that it is new and it has got warranty.

 

Who can import a car?

A Pakistani national, who has spent at least two years (700 days) outside Pakistan. Such person can import one car in two years (700 days). It seems quite difficult to understand right? Let me explain it in simple terms:

For importing a used car, copy of passport of such person is required who has spent at least two years outside in Pakistan. It could be any country, not necessarily Japan from where you intend to import your car. One such passport can be used for importing one vehicle in two years. This is the reason if you look at the registration books of an imported car, even if you are the first owner, it is initially registered in the name of the person whose passport is used to import the car and then transferred to your name.

 

What taxes do we need to pay for imported cars?

Mainly, the importer has to pay these three taxes:

  • Custom Duty: Amount of custom duty has been explained in another question below.
  • Sales Tax: It is calculated as follows:

17% x (Value of car + Custom Duty)

  • Withholding Income Tax: It is calculated as follows:

5% x (Value of car + Custom Duty + Sales Tax)

  • Special Federal Excise Duty: It is calculated as follows:

1% x (Value of car + Custom Duty)

Value of car is the amount determined by the Custom’s officer. Technically, it should be equal to the Purchase price of the car + Shipping, insurance and freight charges. However, in most cases it is different because the importers never declare true purchase price of the car on the Goods Declaration Form.

 

We often hear people saying that the custom duty on imported cars is 200 percent. Is it correct?

No, this statement is not correct.

Duties are not calculated on the basis of cost of the car, in fact they are calculated on the basis of engine capacity (CC). A Special Tax Regime was introduced by FBR for import of used vehicles. Under this regime, the custom duties are levied on the basis of engine capacity only. This means you don’t have to pay anything for any additional accessories in your car. Custom duty for a 2000cc car having additional features such as climate control, additional airbags, alloy rims, privacy glass etc. is exactly similar to custom duty on other 2000cc standard cars which do not have these features and accessories.

Ever wondered why the famous Mazda RX-8 is so cheap in Pakistan. You guessed it right. It has a 1300cc engine, exactly equal to 1300cc Corolla Xli. RX-8 produces 234 horsepower whereas Xli produces 84 horsepower only. However, since both cars are 1300cc, it costs similar to the Xli, even cheaper.

 

How much is the custom duty on used imported cars?

Duty is calculated on the basis of engine capacity. Following is the schedule of custom duty on import of used vehicles:

Type of vehicle (Used vehicles Taxes meant for transport of passengers) Taxes
(Full amount)
USD $
One month old

USD $

1 year old

USD $

2 years old

USD $

3 years old

USD $

  A B C D E
Up to 800 CC (Asian makes only) 4,400            4,356     3,872     3,344     2,816
Up to 800 CC (Other than Asian makes) 6,600            6,534     5,808     5,016     4,224
From 801 CC to 1000 CC 5,500            5,445     4,840     4,180     3,520
From 1001 CC to 1300 CC 11,000         10,890     9,680     8,360     7,040
From 1301 CC to 1500 CC 15,400         15,246   13,552   11,704     9,856
From 1501 CC to 1600 CC 18,700         18,513   16,456   14,212   11,968
From 1601 CC to 1800 CC US$ 23,100 excluding jeeps (Asian makes only) 23,100         22,869   20,328   17,556   14,784

 

A: Full amount of taxes when it is not used

B: One percent reduction in custom duty for each completed month of use.

C: 12% reduction in custom duty for one completed year of use (12 months).

D: 24% reduction in custom duty for two completed years of use (24 months).

E: 36% reduction in custom duty for three completed years of use (36 months).

Note: FBR allows 1% reduction in custom duty for each completed month of use and maximum up to 50% reduction. However, the interesting thing is that a car up to maximum 36 months used can be imported. Therefore, the maximum percentage to which the custom duty could be reduced in 36%.

Since, most of the cars imported in Pakistan are already 36 months used (3 years old), therefore column E of the above table is most relevant for calculating your car’s custom duty.

Completed month means the month from the date of manufacturing till the date of Bill of Entry/Goods declaration.

Other than the above, the government also provides reduction in custom duties on import of hybrid vehicles.

 

What is auction sheet, what is it required for and can it be verified?

Auction sheet is the document issued by the auctioning agency of the country from which the vehicle is being imported.

Auction sheet only explains the true condition of the car at the time of auction as most auctions are online and the bidders cannot personally visit the car for inspection. Therefore, auction sheet mentions all the minute details of the car.

Auction sheet is not required for importing of the car, therefore most importers never provide the auction sheet and even if provided they are fake or forged to hide the defects of the car.

Yes, auction sheets can be verified online. If you know some importer who has an online login to the auction database, he can do it for you for free. Some importers provide paid services for verification of the auction sheets. Recently, Pakwheels also started the same and charges PKR 1,000 for each auction sheet.

 

Do all cars have auction sheets?

No, not all cars have auction sheets. Only cars purchased through auctions have auction sheets. Some cars are purchased privately, therefore they don’t have auction sheets.

 

What are the documents required for import of used car?

  • Goods Declaration Form duly filled
  • Purchase receipt and other purchase related documents
  • Bill of lading
  • Attested photocopy of Pakistani passport

 

Is everything same for the new car as well?

No, all the matters explained above relate to import of used cars only. New cars are imported under Normal Tax Regime. Under this regime, the engine capacity as well as the value of vehicle is taken into consideration for calculation of custom duty.

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Jahangir

This website? Because cars!!!

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Zulifqar

اسلام علیکم بھائی صاحب میں کویت میں ہوں اور اپنے ابو جی کو toyota corolla xli automatic used 2018گفٹ کرنا چاہتے ہوں اس پر کتنا ٹیکس ہے

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