2 min read
In a significant policy shift, the Federal Board of Revenue (FBR) has revised the mechanism used to determine the customs value of imported vehicles, a move that is expected to increase the overall cost of car imports.
According to Customs General Order, issued on January 26, the FBR has amended the long-standing order of 2005, tightening the rules that govern how imported cars are valued for duty and tax purposes. The revised order removes the role of local authorized agents from the valuation process.
Under the earlier system, importers could rely on price certifications issued by authorized local agents or the widely used Asian Trust Price (ATP). These methods often resulted in lower declared values, reducing the amount of customs duty and taxes payable. Over time, this practice became common across the import market.
However, the new order omits the phrase “or their authorized local agents” from key clauses of the valuation criteria. As a result, customs authorities will now primarily assess vehicle values based on the Manufacturer’s Suggested Retail Price (MSRP) set by the original manufacturer.
Industry sources say this change effectively closes a long-criticized loophole that allowed price manipulation through agent-issued certificates. The MSRP, being the official global price, is typically higher than ATP-based or agent-declared values, which means importers are likely to face higher duties and taxes going forward.
The move comes as part of the government’s broader effort to standardize customs valuation and improve transparency in revenue collection. Officials believe relying on manufacturer prices will reduce disputes, under-invoicing and inconsistencies in assessments.
For consumers, however, the immediate impact may be felt at the showroom level. Importers are expected to pass on the increased tax burden, making imported vehicles more expensive at a time when car prices are already high.
While the policy aims to bring clarity and uniformity to the system, it also raises concerns for buyers who depend on imported cars due to limited local options. For them, the question is not about transparency, but affordability and that balance may now be harder to strike.
