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KARACHI: The import value of a 2023 Toyota Land Cruiser, typically worth millions, has been shockingly declared at just Rs 17,635 for customs clearance through the Faceless Customs Assessment (FCA) system, sparking concerns about massive under-invoicing in the luxury vehicle imports.

This was revealed in an audit report compiled by the Directorate General of Post Clearance Audit (PCA) on the FCA system for the period between December 2024 and March 2025.

The audit report has uncovered one of Pakistan’s largest trade-based money laundering schemes in luxury vehicle imports, involving systematic under-invoicing of imported luxury vehicles, with some cases showing gross undervaluation of nearly 100 percent.

Internal review describes FCA system as ‘a complete failure’

The PCA, South auditors have examined 1,335 Goods Declarations for luxury vehicle imports where the difference between declared and assessed duties exceeded Rs 1 million, clearly indicating high under-invoicing in the imports of high-value luxury vehicles.

The audit report revealed that across all 1,335 cases examined, importers collectively declared just Rs 670 million as the import value of the vehicles while the actual assessed values totalled Rs 7,254 million or Rs. 7.254 billion. The fraudulent declarations resulted in initial duty payments of only Rs 1.293 billion when the legitimate tax liability should have been Rs 18.78 billion.

Despite these massive discrepancies being identified during assessment, customs officials failed to demand proof that vehicle purchases were made through legitimate foreign exchange remittances as required by Pakistani import regulations. “In every single case reviewed, importers provided no documentation showing foreign currency payments, strongly indicating the use of illegal Hawala and Hundi networks originating from Pakistan,” the audit report said.

“These aren’t isolated incidents of clerical errors,” customs sources said. “We’re looking at an organised scheme where importers systematically used illegal money transfer channels to pay actual purchase prices abroad while declaring minimal amounts to Pakistani customs to avoid scrutiny.”

The audit revealed that an importer declared a 2023 Toyota Land Cruiser, which featured a 3,444cc engine and was imported from Japan, at a mere Rs 17,635.

However, when customs officers conducted their assessment, they determined the vehicle’s actual value to be Rs 10,049,868, with total leviable duties and taxes amounting to Rs 47,214,182, representing a staggering 99.8percent under-invoicing in vehicle imports.

The PCA auditors also identified a disturbing recurring pattern where importers systematically understated vehicle values to reduce initial duty payments, a practice that not only resulted in short-payment of taxes but also led to deliberate under-valuation of assets in Income Tax Returns.

The audit report highlighted that importers consistently failed to provide proof of payments substantiating that purchases of imported vehicles were made through legitimate remittances originating from foreign countries.

In the absence of such documentation, the report said that the use of illicit channels such as Hawala and Hundi networks, originating from Pakistan, cannot be ruled out.

Under customs rules, the vehicle import payments must be made through official remittances from foreign countries, making the lack of proper documentation particularly concerning.

The significant discrepancies between declared and assessed values, combined with the vast gaps between declared and assessed duties and taxes, have raised serious red flags about the widespread and systematic nature of this fraudulent practice.

The audit report termed these activities as a high-risk Trade-Based Money Laundering scheme, posing a serious threat to Pakistan’s financial system. These findings emerged at a critical time when Pakistan is actively working to strengthen its anti-money laundering frameworks and improve compliance with international financial standards set by organizations such as the Financial Action Task Force and the International Monetary Fund (IMF).

Meanwhile, sources said that the audit report has been forwarded to relevant authorities for comprehensive investigation and prosecution of the identified cases and added that the Federal Board of Revenue (FBR), along with other regulatory bodies including the State Bank of Pakistan and the Financial Monitoring Unit, are expected to take immediate coordinated action to address the systemic vulnerabilities in the luxury vehicle import assessment process and strengthen controls to prevent such future exploitation of the system in future.

Copyright Business Recorder, 2025

ISLAMABAD: The Federal Board of Revenue (FBR) will notify a date for imposing restrictions on the economic transactions of “ineligible persons”, who would fail to declare sources of income/investments in their wealth statements.

Explaining the Finance Act 2025, the FBR has issued income tax circular (1 of 2025) here on Monday.

According to the circular, section 114C has been introduced through Finance Act, 2025. This provision introduces a concept of eligible and ineligible person based upon the financial capacity of a person to conduct an economic transaction in terms of cash or cash equivalent assets declared in the wealth statement filed for the latest tax year or an evidentiary source reflected in investment and expenditure statement filed as justification for availability of funding for conducting an economic transaction during the year.

FBR delays Finance Act steps, eases importers declarations

To be qualified as an eligible person for carrying out specified economic transaction, sufficient resources must be available either in the wealth statement or in the financial statement for the tax year immediately preceding the year of transaction; or in a statement of source of investment and expenditure filed during the year of transaction showing sufficient resources.

Sufficient resources have been defined as one hundred and thirty percent of cash and cash equivalent assets comprising cash denominated in local or foreign currency, fair market value of gold, net realizable value of stocks, bonds, receivables; or any other cash equivalent asset as may be prescribed.

Moreover, an economic transaction involving exchange of already declared capital assets as consideration has been treated as part of cash and cash equivalent assets to the extent of the value mentioned in the transaction agreement.

In case of an individual, the term ‘eligible person’ includes his immediate family members i.e. parents, spouse and dependent children.

Under this new regime, an ineligible person has been barred from purchase of motor vehicle with an invoice value exceeding Rs 7 million; acquisition or transfer of immoveable property having fair market value exceeding Rs 100 million; investment in securities, unit of mutual funds or similar investment having its cost of acquisition exceeding Rs 50 million subject to the condition that the investment up to fifty million rupees must be a new investment in any financial year excluding reinvestment out of liquidation or profit of already held investment.

It is highlighted that the sufficient resources declared in source of expenditure statement will not constitute as nature or sources of income for the purposes of section 111 of the Ordinance. Cash withdrawal from any of his bank account exceeding an amount Rs 100 million is also prohibited under this section.

The provision of this section will not apply on transactions made by a non-resident person or a public company except the transaction of withdrawal of cash.

Moreover, the provisions of this section will come into force from such date as may be notified by the Federal Government through notification in the official Gazette, FBR added.

Copyright Business Recorder, 2025

By Britney Nguyen

Quarterly revenue surpassed $1 billion for the first time and accelerated for the eighth quarter in a row

Shares of Palantir Technologies Inc. rose 4.6% in after-hours trading on Monday after the company’s second-quarter earnings results crushed Wall Street’s expectations – with management projecting even bigger growth ahead.

The company (PLTR) reported June-quarter revenue of $1 billion – up 48% from the previous year, and the first time Palantir’s quarterly revenue has surpassed that mark. That marked the eighth quarter in a row that overall revenue accelerated, and Palantir expects that trend to continue, with its third-quarter guidance implying the potential for 50% growth.

“We continue to see the astonishing impact of AI leverage,” Palantir Chief Executive Alex Karp said in a statement. Speaking with MarketWatch, he called the latest numbers “bombastic.”

U.S. commercial revenue jumped 93% from the previous year to $306 million, while U.S. government revenue grew 53% to $426 million. Overall U.S. revenue was up 68% to $733 million.

“Our numbers show unyielding demand that every part of our business is organically firing on each cylinder, producing numbers that, from my perspective, have never been seen in enterprise software,” Karp told MarketWatch.

The company’s revenue growth was mostly driven by its U.S. business and demand for its artificial-intelligence platform, or AIP, Palantir Chief Revenue Officer Ryan Taylor said. In the June quarter, the company saw momentum from its partnerships with TeleTracking Technologies, TWG Global and GE Aerospace, Taylor added.

From discussions with enterprise customers, Taylor said the company is “seeing very concrete, tangible impacts delivered through AIP.” He said that Citibank is now able to do customer onboarding tasks in seconds that once took days, while Fannie Mae is using Palantir’s software to find instances of mortgage fraud.

The company attributes its success to its Ontology technology, which allows its software platform users to organize and map out data to make decisions. Taylor said that while large-language models are powerful, they “fall flat on basic human understanding,” which is why he thinks companies are turning to Palantir’s software to get the most out of LLMs.

The robust AI demand underpins the company’s expectation for $1.083 billion to $1.087 billion in third-quarter revenue, which is well above the FactSet consensus of $982 million.

Palantir Chief Technology Officer David Glazer told MarketWatch that the company has also applied the AIP product to its own business, driving efficiency gains in the past two years. Palantir has seen 88% growth in revenue during that time while growing headcount by just 12%.

In the latest quarter, Palantir posted adjusted earnings of 16 cents a share, whereas analysts were looking for 14 cents a share. The company improved its score on the Rule of 40 – which adds a company’s revenue growth rate plus its profit margin – to 94 in the second quarter from 83 in the first.

Though the company is pursuing opportunities in the Middle East and Asia, the U.S. continues to be the strong point, Glazer said, pointing out that the U.S. segment makes up about 73% of Palantir’s total business. Palantir just posted 68% revenue growth in its U.S. business, Glazer said, “so while there are pockets of opportunity internationally,” including in continental Europe, the growth isn’t at the same pace as it is in the U.S.

For the full year, the company raised its revenue guidance to between $4.142 billion and $4.150 billion. Palantir was previously targeting $3.890 to $3.902 billion.

Palantir also lifted its U.S. commercial revenue guidance to upwards of $1.302 billion, which would translate to 85% growth. It previously was looking for more than $1.178 billion, which would have equated to at least 68% growth.

-Britney Nguyen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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  08-04-25 2017ET
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