The federal government has proposed new taxes on locally manufactured and imported vehicles as part of Pakistan’s upcoming automobile policy.
The government plans to consult the International Monetary Fund (IMF) before finalising the policy.
An initially approved draft will be sent to the IMF for review.
The proposed measures could affect the prices of petrol-powered vehicles and electric cars in Pakistan.
The government has recommended an Automotive Development Levy on locally manufactured and imported vehicles with engines larger than 1,000cc.
A levy of 2 per cent has been proposed for locally manufactured vehicles above 1,000cc.
Reportedly, the proposal also recommends a 10 per cent levy for vehicles with 2,001cc engines.
The new levy is expected to generate additional revenue over the next five years.
Estimated collections from cars could increase from Rs37 billion to Rs188 billion.
Revenue from buses and trucks under the proposed levy could rise from Rs45 billion to Rs232 billion.
Government and IMF discuss electric vehicle taxes
The government is also discussing tax changes for electric vehicles.
Reportedly, the IMF has demanded an 18 per cent sales tax on electric vehicles.
However, Pakistani authorities have suggested alternative revenue measures to avoid placing the full tax burden on electric vehicles.
One proposal recommends a 10 per cent Federal Excise Duty (FED) on electric vehicles costing more than $75,000.
The government believes this could help reduce the sales tax on lower-priced electric vehicles to 1 per cent.
Another proposal involves imposing additional federal excise duty on vehicles valued above Rs20 million.
This measure will also be discussed with the IMF.
However, the new levies and tax rates have not yet been approved for implementation. Final decisions will depend on government approval.
BYD to sell up to 1,500 cars a month
On the other hand, previously, Hub Power Company (HUBCO) planned to bring its BYD vehicle assembly plant online by the end of 2026, with an initial sales target of up to 1,500 vehicles a month as production gathers pace.
According to research by Arif Habib Limited (AHL), shared after the company’s annual general meeting, HUBCO intends to introduce more BYD models in stages, focusing on vehicles that have the strongest sales potential in Pakistan.
