IMF calls for end to sales tax concession on electric vehicles in Pakistan

Add ARY News on GoogleFollow on Google DiscoverImage EnvatoAAResizeThe International Monetary Fund (IMF) has demanded the abolition of a sales tax concession on electric vehicles (EVs) in Pakistan.

According to sources, the talks were held between the IMF and Pakistan over the release of the fifth tranche of the country’s financial assistance here in Islamabad, the capital city.

During the talks, the IMF questioned the one per cent sales tax currently applicable to electric vehicles, instead of the standard 17 per cent rate.

The IMF has reportedly argued that the reduced rate on EVs and their parts is discriminatory and should be subject to the same tax treatment as other vehicles.

Under proposed changes to Pakistan’s new auto policy, the sales tax on electric vehicles and their parts could be increased to 18 per cent.

According to sources, if implemented, the higher rate would significantly increase the tax payable on EVs.

A vehicle worth Rs.10 million would attract sales tax of Rs.1.8 million at 18 per cent, compared with Rs.100,000 under the current one per cent rate.

The IMF has also reportedly classified electric vehicles as luxury goods and questioned the justification for providing them with a sales tax concession.

Officials are expected to revise the draft auto policy in response to the IMF’s concerns, according to the sources.

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