The decision, formalised under Gazette Extraordinary notification No. 2421/44 took effect from 1 February 2025, marking Stage III of the phased relaxation of import controls imposed since early 2020.

Although the move is expected to revive normal economic activity and cater to pent-up demand, the Government has introduced nine strict conditions to prevent excessive imports, control foreign exchange outflows and boost State revenue.

“Conditions have been imposed pertaining to importation of vehicles in view of encouraging revival of normal economic activities and safeguarding the economic stability of the country, while taking into account protecting foreign exchange reserves, discouraging importation of an excessive number of vehicles and keeping unnecessary stocks of motor vehicles and increasing fiscal revenue,” a statement issued by the Finance Ministry noted.

Following conditions have been imposed pertaining to importation of vehicles;

Required number of vehicles can be imported by the importers registered with the Department of Motor Traffic and State Institutions subject to the Regulations imposed by the said Gazette Notifications.

Any importer other than the importer referred in the (1) above is permitted to import only one vehicle within a period of 12 months.

Any imported motor vehicle shall be registered with the Department of Motor Traffic in the name of the buyer (on instances when purchasing a motor vehicle from a registered importer) or in the name of importer within 90 days from the date of Bill of Entry/ Customs Declaration (CUSDEC).

The importer or buyer shall submit an Affidavit including the Taxpayer Identification Number (TIN) issued by the Department of Inland Revenue along with other required documents to the Commissioner General of Department of Motor Traffic for the registration of motor vehicles. Further, importers, other than the importers referred in the (1) above, shall mention in the said Affidavit that they have not imported any other vehicle during a period of 12 months (from the date of the CUSDEC) after importing the first vehicle.

If it is failed to register any imported motor vehicle within 90 days by an importer, such importer shall be liable to pay a monthly late fee of 3% of the Cost-Insurance-Freight (CIF) value up to maximum cap of 45% CIF value, at the time of registration of motor vehicles at the Department of Motor Traffic.

No waiver pertaining to the payment of monthly late fee shall be granted under any circumstances.

When determining the age of the motor vehicle, the period between the Date of Manufacture and date of the Bill of Lading or Airway Bill of that motor vehicle shall be calculated.

It shall not be allowed for importation and Customs release of any motor vehicle using the motor vehicle import permits which have been issued with concessionary rates of duties.

If any motor vehicle is imported in violation of any prevailing rules and regulations, such motor vehicles (s) shall be re-exported by the respective importer within ninety (90) days from the date of the Bill of Entry/CUSDEC.

Although vehicle imports are now permitted, the Government has reintroduced steep import duties under Gazette Extraordinary notification No: 2421/05 issued on 27 January 2025 under the Revenue Protection Act. This includes a Customs Import Duty (CID) of 20% on the CIF value of all vehicles falling under Chapter 87 of the HS Codes.

The Government also went a step further via Extraordinary Ordinary Gazette notification No: 2421/43, issued on 31 January 2025. Under Section 10(a) of the Customs Ordinance, a 50% surcharge on the existing 20% CID was imposed, effectively raising the total import duty to 30% of the CIF value from 1 February 2025. This measure enacted under Gazette Exemption notification No: 2421/43 is aimed at boosting Government revenue while discouraging excessive imports that could strain fragile foreign exchange reserves.