Audit exposes Rs. 17.5 billion tax fraud in luxury car imports, including Land Cruiser declared at Rs. 17,635
The Directorate General of Post Clearance Audit (PCA) has exposed a staggering Rs. 17.5 billion tax evasion scandal involving the import of luxury vehicles through fraudulent under-invoicing.
According to a detailed audit report, customs officials reviewed 1,335 Goods Declarations (GDs) and uncovered systemic abuse of import regulations. Importers routinely declared vehicle values far below their actual worth, enabling massive tax evasion.
A prime example is the import of a 2023 Toyota Land Cruiser from Japan, declared at an astonishingly low Rs. 17,635—a fraction of its actual value, which exceeded Rs. 10 million. The evaded customs duties and taxes on this single transaction alone amounted to over Rs. 47.2 million, reflecting a 99.8% under-invoicing rate.
The PCA reported that between December 2024 and March 2025, this practice created a massive revenue shortfall, costing the national exchequer billions.
Foreign exchange rules bypassed; remittances not documented
The report also found that importers failed to provide proof of foreign remittance for vehicle purchases, violating State Bank of Pakistan (SBP) regulations. This raises concerns over illicit capital movement via informal systems like hundi and hawala.
Customs negligence enabled fraud
Shockingly, the audit noted that customs authorities did not enforce basic documentation checks. This lapse in oversight enabled importers to exploit Pakistan’s Faceless Customs Assessment (FCA) system, which, though designed for efficiency, lacked proper safeguards against abuse.
Auditors also found that many importers involved in the scam had under-reported their assets and income in tax filings, raising concerns about broader patterns of tax evasion.
Serious implications for FATF and IMF compliance
Labeling the scandal a high-risk Trade-Based Money Laundering (TBML) operation, the PCA warned of its serious implications for Pakistan’s financial integrity. The timing is particularly sensitive, as the country is under close review by the Financial Action Task Force (FATF) and IMF for compliance with anti-money laundering and fiscal transparency standards.
Experts warn that if not addressed swiftly, such scandals could endanger Pakistan’s standing with international lenders and financial watchdogs.