Pakistan has reached an agreement with the International Monetary Fund (IMF) to remove restrictions on the import of used vehicles, setting the stage for a gradual reduction in duties. Under the new framework, import tariffs on used vehicles will initially be set 40% higher than those on new vehicles for the fiscal year 2026, The News reported. Â
This premium will be reduced by 10 percentage points annually, with the aim of reaching zero by 2030.
The agreement is part of the broader National Tariff Policy (NTP) for 2025-30, which the government plans to implement starting July 1, 2025. The policy is designed to reduce trade barriers and simplify customs procedures, including the phased elimination of additional customs duties (ACDs) and an 80% reduction in regulatory duties (RDs). The NTP aims to gradually reduce the weighted average tariff from 10.6% in FY25 to 7.4% by FY30.
The new auto policy, which will take effect on July 1, 2026, promises substantial tariff cuts and reduced protection for the automobile sector, which has previously faced high levels of trade protection. This is expected to reduce the cost of vehicles in Pakistan and increase their affordability.
According to the report, in the first quarter of FY26, Pakistan will remove quantitative restrictions on the importation of used vehicles, provided they are less than five years old and meet environmental and safety standards. The government is also planning to implement new regulations to ensure the safety and environmental compliance of imported vehicles.
The move to liberalize the auto sector comes with a commitment to reduce duties and taxes through depreciation schemes, which are expected to further lower the overall tax burden on used vehicles. The decision aligns with Pakistan’s long-term goals of boosting trade and creating a more competitive market for both imported and locally produced vehicles.
