ByMashhud Aslam
Jul 1, 2026 #30%, #commercial imports, #FBR, #IMF, #Import duty, #Pakistan Cuts, #regulatory duty, #S.R.O. 1065(I)/2026, #used vehicles, #Used-Car
ISLAMABAD: Pakistan’s government on Tuesday lowered the standalone regulatory duty on commercial imports of used vehicles from 40% to 30%, even as the total tax burden on those imports is set to rise because the new rate will be layered on top of a separate tariff increase issued the same day.
The Ministry of Finance and Revenue’s Revenue Division issued the order, S.R.O. 1065(I)/2026, under the Customs Act of 1969. It applies to used cars, SUVs and other vehicles imported commercially under tariff headings 8702, 8703, 8704 and 8711, and it replaces an October 2025 order that had set the duty at 40%.
The notification says the new 30% duty will be charged in addition to a regulatory duty already imposed under a separate order, S.R.O. 1064(I)/2026, issued Tuesday to implement broader tariff changes from the Finance Act 2026. That order restructured duty rates across vehicle categories, cutting some rates — for example, one bracket fell from 50% to 20% — while leaving commercial used-vehicle imports subject to both duties combined.
The order was signed by Additional Secretary Ashhad Jawwad.
A YEAR OF POLICY SHIFTS
The rule change caps a year of fast-moving adjustments to Pakistan’s used-vehicle import policy.
The government began liberalizing the sector last September, when the Economic Coordination Committee of the Cabinet agreed to drop quantitative restrictions on commercial used-vehicle imports, part of a commitment to the International Monetary Fund to ease trade restrictions.
The Ministry of Commerce followed on Sept. 30, 2025, with an order allowing commercial imports of vehicles less than five years old. A day later, the government confirmed a 40% regulatory duty on those imports, on top of standard customs duty, with a plan to reduce that duty by 10 percentage points a year until it reached zero by 2029-30.
Tariff cuts enacted even before that liberalization had already driven up import activity. Pakistan Bureau of Statistics data show car imports were valued at $32.8 million in July 2025, up 61% from $20.3 million a year earlier, according to the newspaper Business Recorder.
IMPORT SHARE CLIMBING
The Engineering Development Board told a National Assembly committee that used vehicles’ share of Pakistan’s car market climbed to 20% in 2025, up from an average of 7.5% between 2020 and 2023.
The Pakistan Association of Automotive Parts & Accessories Manufacturers, an industry group, has said the share could reach 50% if current policies continue, meaning every second vehicle sold in the country would be an imported used car.
By comparison, the EDB said neighboring countries including India, Thailand and Indonesia keep used-vehicle imports below 1.2% of their markets through stricter rules and taxes meant to protect domestic manufacturers.
Sales of new, locally assembled vehicles have been recovering after a steep downturn, rising 52% in 2024 to about 125,000 units and 40% in 2025 to roughly 176,000 units, according to industry data. But local manufacturers say that recovery has been undercut by used imports; the Pakistan Automotive Manufacturers Association reported domestic vehicle sales fell nearly 49% in July 2025 alone, shortly after tariffs were cut, with one manufacturer, Pak Suzuki, down 72% that month.
INDUSTRY OBJECTS
The parts manufacturers’ association says the local auto parts sector, which it says supports about 1,200 suppliers and 1.83 million jobs, is losing an estimated 48 billion to 60 billion rupees a year in reduced demand caused by used imports.
Shehryar Qadir, the association’s senior vice chairman, has said older imported vehicles depreciate quickly and drag down resale values across the market, discouraging buyers from purchasing new, locally made cars.
Government officials have defended the liberalization, saying it is intended to curb smuggling, formalize the used-vehicle trade, give consumers more choice and meet trade commitments made to the IMF.
Under the original timeline set by the Economic Coordination Committee, the five-year age limit on commercially imported used vehicles was expected to be reconsidered after June 30, 2026. Tuesday’s order shows the government instead adjusting the duty structure rather than simply easing it, keeping the combined tax rate on commercial used-vehicle imports above the rate applied to most other vehicle categories.