FBR cracks down on Benami transactions by used car importers, targets billions in tax evasion

The Federal Board of Revenue’s (FBR) anti-Benami zone has launched a major crackdown on Benami transactions involving used car importers, aiming to address billions of rupees in tax evasion. 

According to reports, the crackdown targets systematic abuse of the Vehicle Baggage and Gifts Scheme (VB&GS), originally designed for legitimate personal imports but exploited by commercial importers through clearing agents, allegedly with the support of customs officials.

The enforcement action is focused on vehicle clearances processed between February 2018 and May 2025. Clearing agents have been given seven days to provide detailed explanations for thousands of vehicle imports under the personal baggage scheme, which was intended for personal use only.

The notices issued to clearing agents accuse them of hiding the true ownership of the vehicles and evading billions in taxes and duties over the past seven years. The FBR has demanded extensive documentation from the agents, including import records, customs declarations, bank statements, and details of the true owners of the imported vehicles. 

The authorities have warned of criminal proceedings under the Benami Transactions (Prohibition) Act 2017 in case of non-compliance.

Arshad Khurshid, Chairman of the All Pakistan Customs Clearing Agents Association, confirmed that notices had been issued to association members involved in vehicle clearance. He assured that the association had instructed its members to cooperate fully with the investigation and provide all requested records.

Sources indicate that the crackdown was initiated following direct instructions from Prime Minister Shehbaz Sharif, who ordered decisive action against the misuse of personal baggage, transfer of residence, and gift schemes for importing used vehicles. 

Customs authorities have uncovered a new pattern of fraud, where fraudulent Proceed Realization Certificates were submitted by clearing agents in collusion with private banks. These certificates were verified by the banks, enabling the illegal clearance of vehicles. 

Experts warn that while the crackdown may yield short-term results, long-term policy reform is necessary to address the issue comprehensively.

Despite collecting over Rs. 100 billion from old/used vehicle imports, the government has yet to introduce a commercial import policy to curb illicit activities, with calls for more stringent regulations to prevent such exploitation in the future.