PBC Recommends 10-Car Ownership Cap to Tackle Tax Evasion in Pakistan

The Pakistan Business Council (PBC) has urged the Federal Board of Revenue (FBR) to introduce a cap on individual vehicle ownership, limiting registrations to a maximum of 10 cars per person.

The aim of the proposition is to reduce benami transactions, an illegal practice in which individuals register vehicles under multiple names in order to conceal assets and evade taxation.

Currently, Pakistan does not have a law that governs the number of vehicles that an individual may register.  According to the PBC, individuals and organizations are exploiting this vulnerability by purchasing numerous vehicles and registering them under the names of fictitious or proxy individuals.

This practice, which is also known as benami ownership, allows individuals to circumvent taxes, conceal wealth, and even employ vehicles for money laundering.

PBC Car Ownership Limit

The PBC proposed a limit of 10 vehicles per individual in order to resolve this matter. This implies that no individual should be permitted to register more than ten vehicles in their name throughout Pakistan. The PBC is of the opinion that the rule will:

• Prevent illicit financial activities associated with car purchases.
• Enhance transparency and tax collection in the ownership of cars.
• Assist the FBR in accurately tracking and taxing automotive transactions.
• Prevent artificial demand and stockpiling, which can result in increased car prices.

This prohibition will not affect buyers or companies that require vehicles for business, according to PBC. Rather, it will be directed at those who are abusing the system to evade taxes and conceal assets.

Additionally, the council suggests that this measure be implemented in conjunction with routine audits and improved digital monitoring systems to further regulate car registrations.

Implementation of Ownership Cap

The PBC suggests that the FBR collaborate with the Excise and Taxation Departments throughout Pakistan in order to enforce this policy. The following are some of the recommended measures:

• Increased oversight of vehicle registrations.
• Utilization of digital alerts to identify anomalous automobile acquisitions.
• Consistent audits to identify benami transactions.

The PBC is of the opinion that this proposal will improve financial accountability and prevent tax evasion in the automotive industry. The FBR is now responsible for determining whether or not to incorporate this recommendation into the 2025-26 budget.