The International Monetary Fund (IMF) has reportedly turned down Pakistan’s request to continue sales tax exemptions for hybrid and electric vehicles (EVs) in the upcoming federal budget.
According to media reports, the government is preparing to impose an 18% sales tax on hybrid and electric vehicles as part of its commitments under the IMF programme.
The proposed move is expected to significantly increase vehicle prices and could impact demand for environmentally friendly transportation options across the country.
The withdrawal of tax exemptions is expected to increase vehicle prices in the next fiscal year. During the previous fiscal year, approximately 45,000 vehicles were imported, while imports in the current fiscal year are projected to decline to around 40,000 units.
Sources further indicate that sales tax exemptions and concessions may be reduced or eliminated in the 2026–27 budget. The sales tax on electric vehicles could rise from 1% to 18%, while the current concessional 8% sales tax on hybrid vehicles may also be increased to the standard rate of 18%.
In addition, the government is considering raising the sales tax on hybrid vehicles, electric vehicles, and solar panels from 10% to 18% in the next fiscal year’s budget. It is worth noting that approximately 38,000 vehicles were imported between July and April of the current fiscal year.
Read more: OpenAI plans AI-powered smartphone to take on Apple’s iPhone
