A Land Cruiser for just PKR 17,600? That's what one Pakistani tried to get away with

There's a significant risk of trade-based money laundering in Pakistan, according to its tax collection authority the Federal Board of Revenue (FBR). And in a recent report, the FBR showed just how people attempt it using an example that is both hilarious and alarming at the same time.

In a 161-page report titled "Faceless Customs Report - December 16, 2024 to February 3, 2025", the FBR revealed that one importer who brought in a used 2023 Toyota Land Cruiser with a 3,444cc engine declared its value at a whopping ¥10,000 (PKR 17,635).

However, as the importer's luck would have it, FBR officials stepped in and reassessed the value at ¥5.69 million (PKR 10.05 million). After total duty and taxes, the value rose to PKR 47.2 million.

The case reflected a near-total under-invoicing of 99.8%, raising suspicions of deliberate misdeclaration and potential money laundering.

An internal analysis of import data revealed that numerous luxury vehicles were declared at drastically lower values than their actual worth. Upon assessment, these vehicles were valued significantly higher by customs officials, leading to a major disparity between declared and assessed duties and taxes.

According to official figures, 670 goods declarations (GDs) for vehicle imports—classified under Value-Based (VB) assessments—showed a combined declared value of PKR 1.29 billion. However, upon reassessment, the actual value was found to be PKR 18.78 billion, indicating a staggering 91% under-invoicing. The difference in duty and taxes on these imports exceeded million of rupees in each case.

Customs officials noted that importers systematically understated vehicle values to evade duties and taxes, thereby also misrepresenting the value of movable assets in their income tax returns.

Authorities also raised alarms over the absence of documentary proof that payments for these imported vehicles were made through legitimate remittances from abroad, a requirement under Pakistani law. In the absence of such documentation, officials said there is a credible risk that funds were routed through illicit channels such as hawala or hundi, both common mechanisms in trade-based money laundering operations.

"[The Land Cruiser] case presents clear red flags for trade-based money laundering," a senior Customs official said on condition of anonymity. "The declared value was so absurdly low that it can only be viewed as an attempt to evade financial scrutiny and obscure the actual flow of funds."

Pakistan’s luxury vehicle import sector has come under increasing scrutiny due to the growing trend of under-invoicing and its implications for revenue loss and illicit finance. With imports of high-end vehicles on the rise in FY24 and FY25, customs and financial monitoring agencies are expected to intensify investigations into suspicious import patterns.

Officials said the cases identified so far are only the "tip of the iceberg", with ongoing audits expected to reveal more discrepancies. A multi-agency task force may be formed to investigate links between under-invoicing, tax evasion, and money laundering through trade.