In a stunning revelation, the Directorate General of Post Clearance Audit (PCA) has uncovered a massive customs fraud involving large-scale under-invoicing of imported luxury vehicles, with billions lost in tax revenue.
The audit, which reviewed 1,335 Goods Declarations, revealed a consistent pattern of undervaluing vehicles during import. The declared value of these vehicles stood at just Rs. 670 million, while their actual market value was assessed at Rs. 7.25 billion—a difference that exposed systematic manipulation of customs declarations.
One of the most shocking findings involved a 2023 Toyota Land Cruiser imported from Japan. The importer declared the vehicle’s value at just Rs. 17,635, while its actual value exceeded Rs. 10 million. The correct customs duty and taxes should have totaled Rs. 47.2 million, meaning 99.8% of the duty was evaded through fraudulent under-invoicing.
Between December 2024 and March 2025, auditors estimate a tax shortfall of Rs. 17.5 billion due to these practices, revealing a widespread breach of import and taxation protocols.
No proof of remittance; foreign exchange violations flagged
The PCA also highlighted violations of foreign exchange regulations, as many importers failed to provide documented proof of international remittances for these luxury vehicle purchases. This suggests the widespread use of informal financial channels, potentially indicating illegal money transfers through hundi or hawala networks.
Customs oversight and FCA system flaws exposed
The report criticized customs authorities for failing to verify documentation, allowing importers to exploit Pakistan’s Faceless Customs Assessment (FCA) system. The system, introduced to reduce corruption, appears to have been manipulated due to lack of enforcement and oversight.
Furthermore, auditors found that many of these importers also under-reported their assets in income tax returns, connecting customs fraud to broader issues of domestic tax evasion.
TBML red flag: FATF and IMF concerns grow
The PCA categorised the case as a high-risk Trade-Based Money Laundering (TBML) scheme, raising red flags for international monitoring bodies such as the Financial Action Task Force (FATF) and the International Monetary Fund (IMF).
This scandal has surfaced at a time when Pakistan remains under close watch by international financial institutions, and experts warn that such cases undermine the country’s efforts to improve fiscal transparency and compliance.
