The International Monetary Fund (IMF) has called on Pakistan to end the sales tax exemption currently granted to locally manufactured hybrid and electric vehicles and bikes, sources told ProPakistani.
The IMF has recommended that, starting from the next fiscal year, the exemption be withdrawn, and a standard sales tax rate of 18 percent be imposed.
At present, locally produced hybrid vehicles benefit from a sales tax exemption under the Eighth Schedule. However, this exemption is set to expire on June 30, 2026, according to official documents.
Currently, locally manufactured hybrid electric vehicles up to 1800cc are subject to an 8.5 percent sales tax, while those between 1801cc and 2500cc are taxed at 12.75 percent.
During discussions with the Ministry of Industries and Production, the IMF insisted on removing these vehicles and bikes from the Eighth Schedule and including them in the normal tax regime.
If implemented, the move would end the preferential tax treatment for locally manufactured hybrid and electric vehicles and bikes from the next fiscal year.
If accepted, the move would significantly change the tax structure for the local hybrid vehicle industry, which has benefited from reduced rates to promote cleaner and more energy-efficient transport in Pakistan.