The Federal Board of Revenue (FBR) has issued a notification amending the Customs Rules, 2001, to revise the framework for the temporary import of vehicles by tourists. This move, announced through S.R.O. 1682(1)/2024, introduces stricter conditions for the duty-free entry and retention of vehicles in Pakistan. It aims to enhance regulatory oversight, minimize potential tax evasion, and streamline customs procedures for foreign tourists and tour operators.

1. Retention Period:
   Tourists can temporarily import vehicles without paying customs duties for a period of three months against a valid carnet-de-passage or a bank guarantee. A declaration must be made that the vehicle’s ownership will not be transferred during the stay.
   • An extension of up to three months may be granted by the respective Collector, provided a valid carnet or bank guarantee is furnished, and the tourist undertakes to remain in the country for the extended duration.
   • Re-entry of the same vehicle within one year of its exit is restricted to a maximum period of 14 days unless operated by recognized foreign tour agencies.
2. Extensions in Special Circumstances:
   For cases where export is delayed due to health issues, accidents, or other unavoidable reasons, the Chief Collector of Customs can grant an extension of up to six months. Such extensions require the submission of a fresh or updated bank guarantee or carnet-de-passage.
3. Transit Through Pakistan:
   Vehicles imported solely for transit to another country may enter without carnet-de-passage or bank guarantee. However, customs escort services will be mandatory, and the tourist must pay the applicable escort charges. Vehicle details will also be recorded on the tourist’s passport.
4. Failure to Export:
   Vehicles not exported within the stipulated time without obtaining a valid extension must be surrendered to customs authorities for adjudication.

Tax and Economic Implications

The revised rules reflect the government’s effort to enhance revenue collection and address potential misuse of duty exemptions. Key effects include:

• Reduction in Tax Evasion:
  Limiting duty-free re-entry within one year and imposing strict conditions for extensions minimize the risk of vehicle misuse or transfer within Pakistan.
• Revenue Generation via Guarantees:
  The requirement for valid bank guarantees ensures financial security for customs authorities, providing a safeguard for tax collection if vehicles are not exported within the specified period.
• Encouragement of Formal Processes:
  By introducing escort fees for transit vehicles, the FBR adds a revenue stream while ensuring compliance with customs regulations.
• Boost to Tourism Oversight:
  While the rules aim to facilitate tourists, the conditions discourage practices like transferring vehicles to locals or bypassing tax liabilities, thus protecting the local market.
• Improved Enforcement:
  The mandatory endorsement of vehicle details on passports enhances tracking and prevents unauthorized re-imports under different names.