Old car importers: Anti-Benami zone of FBR initiates big crackdown

KARACHI: The anti-Benami zone of Federal Board of Revenue (FBR) has kicked off massive crackdown against the billions of rupees Benami transactions carried out by old/used car importers during past seven years.

According to the official document, which was exclusively available to the Daily Business Recorder, the anti-Benami zone has launched a comprehensive crackdown targeting the systematic abuse of the Vehicle Baggage and Gifts Scheme (VB&GS), which was designed for legitimate personal imports but has been extensively exploited by commercial importers through clearing agents with the alleged support of customs officials.

The enforcement action is focusing on vehicle clearances conducted between February 2018 and May 2025, giving clearing agents just seven days to provide detailed explanations for thousands of vehicle imports processed under the personal baggage scheme.

The notices have specifically accused clearing agents of concealing the true beneficial ownership of imported vehicles while systematically evading billions in taxes and duties during the seven-year period under investigation.

The anti-Benami zone has demanded comprehensive documentation from clearing agents, including complete import records, customs declarations, detailed particulars of end users and true owners with names, national identity card numbers and addresses, information on all parties involved in transactions, copies of agreements and contracts, bank statements covering the entire seven-year period, and detailed explanations of how commercial vehicles qualified for the personal baggage and gifts scheme and warned to initiate criminal proceedings under multiple sections of the Benami Transactions (Prohibition) Act 2017 in case of non-compliance, showing the determination to hold all responsible accountable for this systematic exploitation of these schemes.

Arshad Khurshid, Chairman of the All Pakistan Customs Clearing Agents Association, confirmed that the anti-Benami zone has issued notices to the association members involved in vehicles clearance.

He said that the association has instructed its members to provide maximum cooperation with the investigation and furnish all requested clearance records to the authorities.

Meanwhile sources informed that the crackdown was initiated following direct instructions from Prime Minister Shahbaz Sharif, who ordered comprehensive action to stop the exploitation of overseas Pakistani passports for misusing personal baggage, transfer of residence, and gift schemes in the import of old/ used vehicles.

The Prime Minister’s directive is now reflecting zero-tolerance approach against the systematic abuse of schemes, which although intended to facilitate overseas Pakistanis for their legitimate personal imports, being misused for years.

The government had previously attempted to address the issue by introducing additional legal requirements in the Import Policy Order, 2022, implemented in 2019 for old/used vehicle imports under these schemes.

These regulations mandated that all duties and taxes for vehicles imported under transfer of residence, personal baggage, or gift schemes must be paid using foreign exchange arranged by Pakistani nationals themselves or local recipients, supported by bank encashment certificates showing conversion of foreign remittance to local currency.

It also restricted that remittances for duty and tax payments must originate from the account of the Pakistani national sending the vehicle from abroad, and must be received either in the sender’s account or, if that account is non-existent or inoperative, in a family member’s account.

To ensure compliance, the government made submission of Proceed Realization Certificates mandatory, including details of remitting banks, remitter names, beneficiary information, account numbers, certificate amounts, and beneficiary banks verified by head offices.

However, customs authorities have found a new pattern of fraud where unscrupulous elements involved in vehicle clearance have been submitting fake Proceed Realization Certificates in collusion with various private banks.

These fraudulent certificates were being verified by the banks themselves, enabling the illegal clearance of vehicles, sources said, suggesting that the ongoing crackdown may not have lasting impact without comprehensive policy reform.

They said that the government collected over Rs. 100 billion through old/used vehicle imports but didn’t promulgate any policy for commercial imports, urging the government to introduce a commercial import policy to completely eliminate such illicit activities.

Copyright Business Recorder, 2025