FBR Busts Luxury Watch Smuggling Ring, Uncovers Rs 180M Tax Evasion

The Federal Board of Revenue’s Large Tax Office (LTO) in Karachi has exposed a smuggling operation tied to luxury watches, used to launder black money and dodge taxes, according to a private TV channel report. The LTO swooped in on three upscale watch stores, accusing them of widespread tax evasion and flouting sales tax rules.

One raid targeted “Collectibles” at Dolmen Mall, where FBR officials confiscated all sales and stock records for failing to follow Point of Sale (POS) requirements. The outlet claimed just Rs 65 million in sales over three years, but the watches—priced between Rs 2 million and Rs 10 million each—point to a far bigger haul. FBR insiders peg the real stock value at Rs 40 million, with actual sales closer to Rs 700 million.

The probe found most of these high-end watches were smuggled into Pakistan, serving as a pipeline to move black money abroad. With a 25% sales tax on luxury goods, the tax dodged on Rs 700 million in sales alone hits around Rs 180 million—a hefty chunk of revenue lost.

For tax law firms, this is a live wire. The FBR’s crackdown signals tighter enforcement, putting businesses on notice to square up their books—perfect for compliance audits or defense strategies. Clients in retail or imports could face similar heat, needing expert help to navigate sales tax regs and POS systems. The smuggling-money laundering link ups the stakes, opening doors for advisory on penalties, settlements, or even whistleblower plays under new transparency laws.

Authorities are promising tough action against this multi-billion rupee scam, and the fallout could reshape tax scrutiny in luxury trades. Tax pros have a front-row seat to guide clients through the mess—or cash in on the cleanup.