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In the recent past, Pakistan has had a major change in vehicle importation policies. Consistent with the government-committed 2025-26 Budget as well as its promises to the International Monetary Fund (IMF), the government has allowed commercial importation of used vehicles aged up to five years - beginning in September 2025 - under the 40 percent additional duty. This step is regarded as an answer to the long-standing need for cheaper imported vehicles and a way to open up the car market slowly. 

What Exactly Is Changing?

Here are the key details of the policy shift:

• Used vehicles up to five years old (i.e., manufactured within the past five years) will be allowed for commercial import from September 2025.

• These imported vehicles will attract a 40% regulatory duty (or extra customs/import duty) in addition to the existing duties/taxes.

• Over the subsequent years, this additional duty will be gradually reduced:
    • FY 2026-27: 30% duty for 5-year-old vehicles
    • FY 2027-28: 20%
    • FY 2028-29: 10%
    • By July 1, 2029, the additional duty is expected to be eliminated.

• From July 1, 2026, age restrictions on imports will be removed (i.e. vehicles older than 5 years may be imported) as long as they comply with safety, environmental, and quality standards. 

Why This Change Was Introduced

A few reasons behind the reform:

1. IMF Conditions & Trade Policy Reform

Under the terms of the agreement Pakistan entered with the IMF, the government undertook to open up trade barriers such as high duty rates and restrictive import controls. One of the components of that roadmap is the policy of importation of used vehicles. 

2. Consumer Pressure and Affordability

The cost of new cars is very high with the duty and taxes (in some cases more than 100 percent), and the possibility to import used cars makes the cars cheaper to the Pakistani population. 

3. Industry Strategy & Revenue

Even with the 40% duty, the government expects to collect more revenue due to volume and import activity. Also, the policy forces competition, which could lead domestic manufacturers to improve quality and adjust pricing.

What Is “Car Import Duty Pakistan 2025” Going to Look Like Under This Policy?

When people refer to the car import duty Pakistan 2025, here’s what to expect:

• For a 5-year-old vehicle imported commercially starting September 2025, the used car import duty in Pakistan will include the standard customs duty + any existing taxes + an additional 40% regulatory duty/import premium.

• Over the next four years, that additional duty will drop each year (30%, 20%, 10%) until it reaches zero by 2029.

• The policy requires that all imported used vehicles meet environmental and safety standards. That means inspections, emissions compliance, etc. Old loopholes will narrow. 

What This Means for Used Car Buyers & Importers

If you’re thinking about importing a used car (5 years old) or buying one already imported, these changes affect you in several ways:

Larger Choice: More models are feasible as the age limit is changed to 5 years, and later older.

Cost Still High Initially: The 40% additional duty is a significant cost, and therefore overall landed price is high

Long-term savings: In case you can spare a few years (the duty is cut annually), the overall cost of import will fall.

Quality Matters: Cars will be obliged to pass environmental and safety inspections, and therefore, purchasing good models in good condition will be even more significant.

Market Implication: The used imports can cause prices of some of the locally assembled cars or new cars to be pushed down due to competition in the supply.

Frequently Asked Questions

Q: Will the 40% duty apply to imports underthe  baggage or gift schemes?

A: There’s been discussion that the 40% duty also applies to commercial imports. But the baggage/gift schemes may have different rules; some sources say the 40% duty may not apply under the baggage scheme or may have differing conditions. 

Q: When exactly will 5-year-old imports with 40% duty start?

A: Starting 1 September 2025, commercial imports of up to 5-year-old vehicles with 40% extra duty will be permitted. 

Q: What happens after 2025-26?

A: The extra duty will be reduced gradually: 30% in FY26-27, then 20%, 10%, and will end by July 1, 2029. Also, by July 2026, age limits will be lifted altogether, subject to quality/safety standards. 

Challenges & Industry Concerns

While the policy is promising, several stakeholders have raised concerns:

• Local auto manufacturers worry that increased used car imports will hurt local production and affect jobs. 

• Regulators stress the need for enforcing environmental and safety standards to avoid flooding the market with polluting or unsafe cars.

• There are also concerns about potential misuse in baggage/gift schemes. Oversight will be needed.

Bottom Line

The new policy on 5-year-old car import in Pakistan with a 40% duty starting September 2025 represents a significant shift. It offers an opportunity for more affordable used cars, more choices for consumers, and greater market competition. But the benefits will depend on clear regulations, enforcement of quality standards, and the phased reduction of duty as planned.

If you’re planning to import a used car or buy one already imported, keep an eye on duty rates each year, model age, and the compliance of the vehicle with environmental & safety requirements to ensure you get a good deal without surprises.