Pakistan abolishes Personal Baggage Scheme for car imports: Reform or just a new channel for abuse?

Pakistan has made a bold move in its fight against tax evasion from used car imports: completely abolishing the Personal Baggage Scheme. The decision, approved by the Economic Coordination Committee (ECC) and the Federal Cabinet, ends a decades-old loophole that allowed overseas Pakistanis and others to import used cars at preferential duty rates. In practice, the scheme was widely abused by commercial car dealers who hired eligible individuals to import vehicles and then resold them at market prices. The new policy retains the Gift Scheme and Transfer of Residence Scheme but with stricter conditions: three years of residence abroad with at least 850 cumulative days, a three-year interval between imports, and a one-year ban on transferring ownership. While the reform is promising, analysts warn that without strong enforcement and monitoring, commercial importers may shift their abuse to the retained schemes. The Ministry of Commerce says it is too early to assess the impact. The case offers lessons for other developing countries, including Vietnam, about the need to close loopholes and build institutional capacity alongside regulatory changes.