Pakistan has announced a major policy shift, allowing the commercial import of used cars up to five years old starting from September 2025. Under the new import policy, these vehicles will be subject to a 40% customs duty, marking a significant change from the existing three-year limit.

This move is designed to offer more affordable vehicle options for Pakistani consumers while gradually reducing import tariffs over the coming years. A phased duty reduction plan is in place, with duties decreasing to 30% by July 2026, 20% by July 2027, 10% by July 2028, and ultimately reaching 0% by July 2029.

The policy will not affect returning overseas Pakistanis who import vehicles under the baggage scheme, as they will remain exempt from this additional duty.

In addition to customs changes, the government will also implement a carbon levy on petrol and diesel vehicles. This includes a 2% levy on vehicles with 1300cc to 1800cc engines and a 3% levy on vehicles above 1800cc. These levies will apply to both imported and locally assembled vehicles and aim to promote environmental responsibility.

This forward-looking policy balances consumer affordability, environmental goals, and industry competitiveness, aligning with broader economic reform objectives.