Imported cars scam

The scam is said to be growing since 2001 when diplomats were allowed to use covered registration number plates

Afew years ago, a German woman whose visa had expired married a poor cycle rickshaw puller in an Asian country to enable her to stay in that country. In the novel A Short History of Tractors in Ukraine, an 84-year-old Ukrainian man marries a young American woman to get US nationality. Now it has come to light that Pakistanis who buy expensive luxury cars by evading heavy import duties get themselves declared drivers of embassies. Diplomats issue fake appointment letters that claim that “the Pakistanis owning the cars are drivers of the embassy in question.” The total loss to the exchequer under this head could be Rs70 billion a month or Rs840bn a year. This is happening at a time when the government is making effort to fetch more and more taxes by expanding the tax net.

The modus operandi of evading billions in duty is said to be that vehicles are imported by diplomats and representatives of INGOs, etc, but the actual owners of the vehicles are reportedly Pakistanis. As foreign diplomats and representatives of INGOs are exempt from paying import duty, the vehicles they import carry diplomatic registration number plates for three years. Import duty is not levied on vehicles that are three years old or more, so these vehicles are transferred in the name of their actual owners (Pakistanis) after that period. The price of a Lexus SUV is Rs10 million. If a Pakistani imports it, he has to pay an import duty of Rs30 million. But those exempt from paying import duty save Rs30 million. So the importer (foreign diplomat) gets a monetary benefit and the actual owner (a Pakistani) gets the vehicle at a far lower price than its market price. The market price of a Lexus is over Rs40m. But under the scam it is bought for Rs15-20m.

The scam is said to be growing since Sept 11, 2001, when the government allowed diplomats to use covered registration number plates due to security reasons.

Published in The Express Tribune, January 4^th, 2020.

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