IMF objects to sales tax exemption for EVs

The International Monetary Fund (IMF) has rejected Pakistan’s proposed sales tax exemption on electric vehicles (EVs), insisting that the tax rates should remain in line with standard policies, Express News reported on Wednesday.

According to sources, the global lender raised objections to tax concessions under the country’s EV policy, particularly the exemption on the local sale of electric vehicle components.

The Ministry of Industries and Production had recommended the tax relief to boost EV adoption, but the IMF opposed the move, arguing that sales tax on raw materials for EVs should not be waived.

Pakistan and the IMF are currently engaged in climate financing negotiations, with discussions now in their third round.

Talks are also scheduled on electric vehicle charging stations and tariff adjustments, with authorities set to brief the IMF on the country’s target of establishing 3,000 charging stations by 2030.

It should be noted that a technical delegation from the International Monetary Fund (IMF) arrived in Islamabad on Monday to discuss climate financing and related policy measures with Pakistani officials.

The IMF team's aim is to engage in talks with federal and provincial authorities to review climate funding strategies, including green budgeting and tracking mechanisms.

The discussions, set to run until February 28, aim to assess Pakistan’s progress on climate adaptation and financing.

One key agenda item is the proposed introduction of a carbon levy in the federal budget for the 2025-26 fiscal year.

The IMF will present recommendations on its implementation and framework.

The negotiations also cover subsidies, electric vehicles, and the expansion of green budgeting. Officials are expected to provide briefings on Pakistan’s current climate initiatives and future plans.

The IMF delegation’s visit is part of broader efforts to align Pakistan’s financial policies with global climate commitments, ensuring sustainable economic reforms.