Pakistan’s Prime Minister, Shehbaz Sharif, has directed authorities to seize all luxury vehicles that are being driven beyond their Carnet-de-Passage limit (CPD), which is a permit for temporary import. Sharif also ordered the confiscation of high-end non-custom duty paid vehicles that are being used in the country without being checked. During a special meeting, the prime minister took notice of these vehicles and asked why the relevant departments failed to act against them in time. He also instructed the formation of an inquiry committee to take strict action against officials involved in the misuse of the scheme or negligence in this regard.
Furthermore, the Federal Board of Revenue (FBR) has been asked to compile data on vehicles that have exceeded their CPD limit. The FBR has already taken up the matter with the Ministry of Foreign Affairs, asking it to write to all foreign embassies and international NGOs to determine their criteria for importing luxury vehicles for diplomats and other foreign nationals who are exempted from import duty while importing vehicles for their use during their stay in Pakistan.
According to reports, the FBR has received information that some embassies and diplomatic missions are misusing the facility of duty-free import of vehicles by importing vehicles beyond their actual requirements. The FBR has urged the Ministry of Foreign Affairs to review the existing regime of duty-free import of vehicles by embassies, diplomatic missions, and dignitaries.
The modus operandi of evading billions of rupees of import duty is that vehicles are imported by a diplomat, representative of international NGOs, or military personnel/attaché of different countries, who stay in Pakistan for a specific period. The actual owner of the vehicle is said to be a Pakistani acting behind the scenes. These vehicles are then handed over to unauthorised persons for use and are sold by diplomats to the so-called local owners after some time.
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As foreign diplomats, representatives of international NGOs, and armed forces personnel of various countries are exempted from import duty, the vehicles they import are plied with diplomatic registration number plates for three years. After that, as imported duty is not levied on vehicles that are three years old or older, these vehicles are transferred to the name of the actual owner (Pakistani).
According to senior officials of the vehicle registration authority in Islamabad, this scam has been on the rise since 9/11 when the government allowed diplomats to use covered registration number plates due to security reasons. “Now cars are imported by diplomats, and they are misused by Pakistani owners with covered number plates,” an official said on condition of anonymity.
In some cases, diplomats issue fake appointment letters to Pakistani owners, pretending that they are drivers of the embassies. It is estimated that the import duty on high-end luxurious vehicles that are being imported in this way is evaded to the tune of billions of rupees every year.