ISLAMABAD (Busniess Desk) – The Federal Board of Revenue (FBR) has reduced regulatory duties on imported Sport Utility Vehicles (SUVs), All-Terrain Vehicles (ATVs), and Completely Built-Up (CBU) vehicles under the Federal Budget 2026-27, marking one of the most significant changes to Pakistan’s automobile import policy in recent years.
The revised duty rates came into force immediately after the FBR issued a new statutory regulatory order (SRO), implementing the federal government’s budget decisions. The move is expected to reduce the cost of importing certain categories of vehicles while encouraging greater competition in Pakistan’s automobile sector.
Under the revised structure, the regulatory duty on imported SUVs and ATVs with engine capacities of 1,800cc and above has been reduced from 50 percent to 20 percent. Meanwhile, imported CBU vehicles and SUVs with engine capacities below 1,800cc will now attract an 8 percent regulatory duty instead of the previous 10 percent.
Officials say the reduction is part of broader fiscal reforms introduced in the federal budget to modernize Pakistan’s import and taxation framework. The government hopes the revised duties will improve consumer choice while creating a more competitive environment in the automobile market.
The decision has been welcomed by vehicle importers, who have long argued that high regulatory duties limited competition and kept imported vehicles beyond the reach of many buyers. Importers believe lower duties could increase the availability of international vehicle models and encourage local manufacturers to improve quality and pricing.
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Pakistan’s automobile market has remained dominated by a small number of local assemblers for decades. Industry observers say limited competition has contributed to higher vehicle prices, lengthy delivery periods and fewer options for consumers compared with regional markets.
The latest policy change follows repeated demands from the All Pakistan Motor Dealers Association (APMDA), which has criticized the country’s long-standing automobile policy. The association argues that protectionist measures have favored local assemblers while discouraging competition from imported vehicles.
APMDA Chairman HM Shahzad recently said Pakistan’s automobile policy was originally designed to promote technology transfer, increase localization, manufacture affordable vehicles and eventually develop an export-oriented automotive industry. However, he claimed those objectives have not been fully achieved despite decades of government support.
According to the association, much of Pakistan’s vehicle production continues to rely heavily on imported Completely Knocked Down (CKD) and Semi Knocked Down (SKD) kits instead of locally manufactured components. Importers argue that greater competition would encourage genuine localization and improve industry standards.
Industry analysts believe the duty reduction may influence pricing across multiple vehicle categories if import volumes increase. Lower import taxes could also pressure local manufacturers to offer better features, improved quality and more competitive prices to retain market share.
However, experts caution that the final retail price of imported vehicles will still depend on exchange rates, freight costs, customs valuation, sales tax and other applicable duties. As a result, the overall reduction in showroom prices may vary depending on the vehicle model and country of origin.
Automobile dealers also expect the revised duty structure to increase consumer interest in imported hybrid and premium SUVs, which had become significantly more expensive due to high regulatory duties in recent years.
The government’s latest budget measures reflect a broader effort to balance revenue collection with economic reforms aimed at improving market efficiency and consumer welfare. Whether the policy succeeds in increasing competition and reducing vehicle prices will become clearer over the coming months as import activity responds to the revised tax structure.
The FBR has directed customs authorities nationwide to implement the new regulatory duty rates immediately under the Budget 2026-27 framework, allowing eligible vehicle imports to benefit from the reduced tariffs without delay.
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