IMF Calls for End to Sales Tax Concession on Electric Vehicles in Pakistan
A proposed hike from 1% to 18% sales tax would increase the levy on a Rs10 million EV from Rs100,000 to Rs1.8 million, as talks continue over the fifth tranche of Pakistan's IMF programme.
The IMF demands an end to Pakistan's 1% sales tax concession on electric vehicles, pushing for a hike to 18% as part of ongoing loan tranche talks.
The International Monetary Fund has demanded the abolition of a sales tax concession currently applied to electric vehicles in Pakistan, according to sources familiar with ongoing talks in Islamabad over the release of the fifth tranche of the country's financial assistance programme.
What the IMF Is Questioning
During the talks, the IMF questioned the 1% sales tax currently applicable to EVs, compared with the standard 17% rate applied to other vehicles. The Fund has reportedly argued that the reduced rate on EVs and their parts is discriminatory and should be brought in line with standard tax treatment, also classifying electric vehicles as luxury goods and questioning the justification for the concession.
What a Change Would Mean in Practice
Under proposed changes to Pakistan's new auto policy, the sales tax on EVs and their parts could rise to 18%. According to sources, a vehicle worth Rs10 million would attract sales tax of Rs1.8 million under the higher rate, compared to just Rs100,000 under the current 1% concession.
What Happens Next
Officials are expected to revise the draft auto policy in response to the IMF's concerns, according to sources familiar with the discussions.
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